Today I Learn… I make a point of learning something new everyday. This is what I learn each day

1, Apr 10, 2012

Six Foundamental Principles of Economic Thinking, Part I

Filed under: Economy — admin @ 12:36 am

On 4/1/2012, I watched one of the Great Courses that I bought the day before. The course title is Thinking like an Economist: A Guide to Rational Decision Making. Well, I know it is a bit late for me to learn to think rationally. Still, I couldn’t resist the temptation of some improvement.

The lecture starts with a brief review of the 6 foundation principles of economic thinking, which I think rather interesting. Below are the  from the lecture.

First principle: People respond to incentives. No premise is more central: If you reward a behavior, people will do more of it and more intensely; if you penalize it, they’ll do less of it.

Second principle: There is no such thing as a free lunch. It sounds silly, but that expression captures a lot of economic thought. Any use of time or limited resources for one purpose is an opportunity forever gone to use them for another.

More of anything always means less of something else; and it’s that option that you had to give up that economists call opportunity cost.
To be continued…

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