Chapters 1 and 2

Chapters 1 and 2 - Chapter 1 Ten Principles of Economics Basic ideas that compromise the essence of economics Simplistic yet useful as starting

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Basic ideas that compromise the essence of economics. Simplistic yet useful as starting points. Chapter 1 Ten Principles of Economics
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A list of all 10 principles: 1. People face trade-offs. 2. The costs of something is what you give up to get it. 3. Rational people think at the margin. 4. People respond to incentives. 5. Trade can make everyone better off. 6. Markets are usually a good way to organize economic activity. 7. Governments can sometimes improve market outcomes. 8. A country’s standard of living depends on its ability to produce good and services. 9. Prices rise when the government prints too much money.
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ignore details that are not relevant to issue at hand: 7 principles for MICRO 1. People face trade-offs. 2. The costs of something is what you give up to get it. 3. Rational people think at the margin. 4. People respond to incentives. 5. Trade can make everyone better off. 6. Markets are usually a good way to organize economic activity. 7. Governments can sometimes improve market outcomes.
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Which is the easiest microeconomic principle to understand? My choice: 4. People respond to incentives. Grades as an example of incentives. I purposefully structure the grading system to influence the choices you make: example of homework’s contribution to your course grade. Questions to think about: Do you need an incentive to take homework seriously?
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1. People face trade-offs. What is a “trade-off”?
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This note was uploaded on 12/30/2011 for the course ECON Econ 200 taught by Professor Clement during the Fall '11 term at Maryland.

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Chapters 1 and 2 - Chapter 1 Ten Principles of Economics Basic ideas that compromise the essence of economics Simplistic yet useful as starting

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