2️⃣ The cost of something is what you give up to get it (cost of any action should be measured in the foregone opportunity)
3️⃣ Rational people think at the margin (eg. don’t think between eating a meal or fasting, but instead about eating another spoon of mashed potatoes) - they compare the marginal cost with the marginal benefit
4️⃣ People respond to incentives - they change the behavior according to incentives
Interactions between individuals
5️⃣ Trade can make everyone better off - trade can be mutually beneficially (there can be two winners in a deal)
6️⃣ Markets are usually a good way to organize economic activity - markets are a good way to conduct trade amongst people
7️⃣ Governments can sometimes improve market outcomes - this is true when there are market failures or market outcome is inequitable
Economy as a whole
8️⃣ A country’s standard of living depends on its ability to produce goods and services - productivity is the ultimate source of living standards
9️⃣ Prices rise when the government prints too much money - money growth is the ultimate source of inflation
🔟 Society faces a short tradeoff between inflation and unemployment - as some prices take time to catch up in change, so unemployment can change faster than inflation (eg. money gets reduced faster than prices reduce)
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Economy