The document outlines 10 principles of economics: 1. People face tradeoffs in decision making as resources are scarce. 2. The cost of something is measured by what one gives up to obtain it, including opportunity costs. 3. Rational people think at the margin, weighing marginal costs against marginal benefits.

1. Ten Principles Of
Economics
Personal

2. How People Make Decisions
• 1 People Face Trade Off
• 2 The Cost Of Something Is What Has To BE Given Up To Get It
• 3 Rational People Think At The Margin
• 4 People Respond To Incentives

3. 1. People Face Tradeoffs.
• To get one thing, you have to give up to get something else. Making
decisions requires trading off one goal against another.
• E.g. :- If you are owner of a car and mobile phone company.
and you want to increase production of cars then you have to reduce
production of mobile phones. Due to scarcity of resources.

4. 2. The Cost of Something is What You
Give Up to Get It.
• Decision-makers have to consider both the obvious and implicit costs of their
actions.
• Since people faces tradeoff, people should make decision and compare the benefit
of all options that they have. When attending college, the student should be aware
of the opportunity costs that accompany each possible action. One example of this
principle is college attendance decision. The benefit is intellectual enrichment and a
lifetime of better jobs opportunities. Beside the benefit, decision maker should
consider the cost of attending college. Students should be tempted to add up the
money to spend on tuition, books, room and board.

5. 3.Rational People Think At the Margin
• A rational decision-maker takes action if and only if the marginal benefit of
the action exceeds the marginal cost.
• For example, in order to decide whether a student should take another
couple years to got a graduate or PhD degree, they should think the
additional benefits or margins that an extra year in school would offer and
the additional cost that you would incur. By comparing these marginal
benefits and marginal costs, the student can evaluate whether the extra year is
worthwhile.

6. • Behavior changes when costs or benefits change.
• For example, a sale is nothing more than a store providing an incentive to
potential customers to buy . The lowering of the price makes the purchase a
better idea for some customers; the sale seeks to persuade individuals to
change their actions (namely, to buy the product)
4.People Respond to
Incentives.

7. How the Economy Works as A Whole
• 5 Trade Can Make Everyone Better Off
• 6 Markets Are Usually a Good Way To Organize Economic Activity
• 7 Government Can Sometimes Improve Market Outcomes

8. 5.Trade Can Make Everyone Better Off
• Trade allows each person to specialize in the activities he or she does best. By
trading with others, people can buy a greater variety of goods or services.
Trade involves competition. Your family competes with other families in the job market and in
the grocery store. Yet, not allowing trade would make everyone worse off.
Trade allows you to specialize in what you do best, allowing more consumption for everyone.
The same point applies to trade between countries. If we are relatively more efficient at
producing services than certain manufactured goods, we benefit from having trading partners
who are suppling those goods.

9. 6. Markets Are Usually a Good Way to
Organize Economic Activity
• Households and firms that interact in market economies act as if they are
guided by an "invisible hand" that leads the market to allocate resources
efficiently. The opposite of this is economic activity that is organized by a
central planner within the government.

10. 7.Governments Can Sometimes Improve
Market Outcomes
• When a market fails to allocate resources efficiently, the government can
change the outcome through public policy. Examples are regulations against
monopolies and pollution.

11. How People Interact
• 8 A Country’s Standard Of Living Depends On Its Ability To Produce
Goods And Services
• 9 Price Rise When Government Prints Too Much Money
• 10 Society Faces a Short-Run Trade Between Inflation And Unimployment

12. 8.A Country's Standard of Living Depends on
Its Ability to Produce Goods and Services
• Countries whose workers produce a large quantity of goods and services per
unit of time enjoy a high standard of living. Similarly, as a nation's
productivity grows, so does its average income.

13. 9. Prices Rise When the Government Prints
Too Much Money
• When a government creates large quantities of the nation's money, the value
of the money falls. As a result, prices increase, requiring more of the same
money to buy goods and services.

14. 10. Society Faces a Short-Run Tradeoff
Between Inflation and Unemployment
• Reducing inflation often causes a temporary rise in unemployment. This
tradeoff is crucial for understanding the short-run effects of changes in
taxes, government spending and monetary policy.