| A | B |
|---|
| People Face Tradeoffs | Making decisions requires pursuing one goal at the cost of another. There is no such thing as a free lunch. |
| The Cost of Something Is What You Give Up to Get It | Opportunity Cost: whatever must be given up to obtain some item. |
| Rational People Think at the Margin | Small incremental adjustments to a plan of action. |
| People Respond to Incentives | Because people make decisions by weighing costs and benefits, their decisions may change in response to changes in costs and benefits. |
| Trade Can Make Everyone Better Off | It allows countries to specialize in what they do best and to enjoy a wider variety of goods and services. |
| Markets Are Usually a Good Way to Organize Economic Activity | Market prices reflect both the value of a product to consumers and the cost of the resources used to produce it. Therefore, decisions to buy or produce goods and services are made based on the cost to society of providing them. |
| Governments Can Sometimes Improve Market Outcomes | When there is a market failure, these plocies promote efficiency and equity. |
| A Country’s Standard of Living Depends on Its Ability to Produce Goods and Services | The quantity of goods and services produced from each hour of a worker’s time effect how well the society lives. |
| Prices Rise When the Government Prints Too Much Money | Inflation. |
| Society Faces a Short-Run Tradeoff between Inflation and Unemployment | Phillips curve. |
