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6 Basic Principles of Economics

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Emily Collias

on 1 April 2014

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Transcript of 6 Basic Principles of Economics

#1 People Choose...
B/c of scarcity... never enough! People must constantly choose among alternatives. Also between spending & saving!
#2 All Choices Have an Opportunity Cost!
Always an alternative course of action! When we choose 1 thing, we give up something else...(see notes!)
#4 Economic Systems Influence Choices
Make your decisions based on economic system. Follow written & unwritten rules of the system.

(ex.: wages impact choice of occupation in market econ.; people don't have choice to invest in stock market in command economy)
#5 Consequences of Choices Lie in the Future
We impact our future by the decisions we make. Sometimes those are unintended consequences!

Work for a company... company gets the work you do while you get wages!

Buy a shirt, you get a new shirt and producer gets your money!
#6 People Gain When They Trade Voluntarily
We don't produce everything we consume. We trade/exchange to satisfy econ. wants. Both parties benefit.
#3 People Respond to Incentives in Predictable Ways!
Incentive=something (+ or -) that influences the choices one makes. If incentives change, people change behavior...

(ex.: prices rise, people buy less)
Choose to become a doctor: lots of school and training but eventually a higher income.

Govt tries to help people by capping gas prices--will probably create long lines and irritation
6 Basic Principles of Economics
Create mini-posters explaining the 6 basic principles in YOUR OWN WORDS and provide visual explanation of each principle. You will have 6 mini-posters. Be neat, colorful, creative.
Your assignment:
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