How People Make Decisions?

Principle #1: People face tradeoffs

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

Principle #3: Rational people think at margin

Principle #4: People respond to incentives

How People Interact?

Principle #5: Trade can make everyone better off

Principle #6: Markets are usually a good way to organize economic activity

Principle #7: Governments can sometimes improve market outcomes

How The Economy As A Whole Works?

Principle #8: A country’s standard of living depends on its ability to produce goods and services

Principle #9: Prices rise when the government prints too much money

Principle #10: Society faces a short-run tradeoff between inflation and unemployment

Reference: “Essentials of Economics”, N. Gregory Mankiw, 2005