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.



Monday, July 26, 2010

Why Starbucks Lost Its Mojo

Why Starbucks lost its mojo - CSMonitor.com
This article addresses the motives behind the purchases we make. More often then not we buy things for what they say about us, not because we necessarily have a craving. Starbucks sold an image, but now their logo is so ubiquitous that it is no longer trendy. They same thing happened to Nike. The "swoosh" became so commonplace and thus mainstream, killing the coolness. Both companies had a nice run, though.
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