Ten Key Principles of Economics

1. Everything has a cost. There is no free lunch. There is always a trade-off.
2. Cost is what you give up to get something. In particular, opportunity cost is cost of the tradeoff.
3. One More. Rational people make decisions on the basis of the cost of one more unit (of consumption, of investment, of labor hour, etc.).
4. Incentives work. People respond to incentives.
5. Open for trade. Trade can make all parties better off.
6. Markets Rock! Usually, markets are the best way to allocate scarce resources between producers and consumers.
7. Intervention in free markets is sometimes needed. (But watch out for the law of unintended effects!)
8. Concentrate on productivity. A country’s standard of living depends on how productive its economy is.
9. Sloshing in money leads to higher prices. Inflation is caused by excessive money supply.!!
10. Caution: In the short run, falling prices may lead to unemployment, and rising employment may lead to inflation.



Sunday, July 11, 2010

There's No Such Thing As Free


You can save money by cancelling your cable and DVR subscriptions because you've heard that many of your favorite programs are "free" on hulu.com or clicker.com. But are they truly "free" when you consider the time spent searching for those episodes? An economist would say you always pay one way or another.
Posted by at
Labels: , ,

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)