What are the 10 Principles of Economics?
Gregory Mankiw, in his text Principles of Economics , describes 10 principles of Economics, which are summarized below: People face trade-offs The cost of something is what you give up to get it Rational people think at the marginal cost and marginal revenue People respond to incentives Trade can make everyone better off Markets are usually a good way to organize economic activity Governments can sometimes improve market outcomes A country's standard of living depends on its ability to produce goods and services Growth of money leads to inflation Society faces a short-run tradeoff between Inflation and unemployment. People Face Tradeoffs To get one thing, we usually have to give up something else Ex. Leisure time vs. work “There is no such thing as a free lunch (TINSTAAFL).” Making decisions requires trading one goal for another. Examples include how students spend their time, how a family decides to spend its income, how the government spends revenue, and how regulations may...