Big ideas Flashcards
Week 1
1
Q
What are the three main big ideas taught? (3 marks)
A
Incentives Matter
Good institutions align with Social Interest
Trade offs are everywhere
2
Q
Why do incentives matter?
A
They motivate peoples behaviour.
3
Q
Why do good institutions align with self-interest?
A
If the market is well functioning, peoples self-interest will also promote social interest.
4
Q
What do they mean by “Trade-offs are everywhere”?
A
Everything has an opportunity cost.
5
Q
What is opportunity cost?
A
This is the benefit/money lost when choosing another option.
(Gains of non-chosen option) - (Gains of chosen option)
6
Q
What does the power of trade increase?
A
It increases production through specialization.
7
Q
A
