Principles of economics

Question 1

First 5 principles

Answer 1

1. People face trade-offs.
2. Cost of something is what you give up to get it.
3. Rational people think at the margin.
4. People respond to incentives.
5. Trade can make everyone better off.

Question 2

Next 5 principles

Answer 2

6. Markets are a good way to organise economic activity.
7. Governments can sometimes improve market outcomes.
8. Standard of living depends on Country’s production.
9. Prices rise when government prints too much money.
10. Society faces a short-run trade-off between inflation and unemployment.