Principles of Economics

Basic Concepts and Definitions

Ten Principles of Ecnonomics

Principle # 1: People face trade-offs

Principle # 2: The cost of something is what you give up to get it

Principle # 3: Rational People Think at the Margin

Principle # 4: People Respond to Incentives

Exercise

Exercise on Applying the Principles of Economics: Costs and Benefits

Check your answers here: Solution to the Exercise on Applying the Principles of Economics: Costs and Benefits

Principle # 5: Trade Can Make Everyone Better Off