7 Economic Principles

Trade Makes People Better Off

By focusing on what we do well and trading with others, we will end up with more and better choices than by trying to do everything for ourselves.

Future Consequences Count

Decisions made today have consequences not only for today but also in the future.

Scarcity Forces Tradeoffs

Limited resources force people to make choices and face tradeoffs when they choose.

Markets Coordinate Trade

Markets usually do better than anyone or anything else at coordinating exchanges between buyers and sellers.

Thinking at the Margin

Most of the decisions we make each day involve choices about a little more or a little less of something rather than making a wholesale change.

Costs Versus Benefits

People choose something when the benefits of doing something so are greater than the costs.

Incentives Matter

The people respond to incentives in generally predictable way.