Lecture 2: Principles of Economics

HOW PEOPLE MAKE DECISIONS 

#1: People Face Tradeoffs

 #2: The Cost of Something Is What You Give Up to Get It

#3: Rational People Think at the Margin

#4: People Respond to Incentives

HOW PEOPLE INTERACT 

#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

HOW THE ECONOMY AS A WHOLE WORKS 

#8: A Country’s Standard of Living Depends on Its Ability to Produce Goods and Services

#9: Prices Rise When the Government Prints Too Much Money

#10: Society Faces a Short-Run Tradeoff between Inflation and Unemployment 

(Mankiw)