“The 10 Things In Economics That Everybody Should Know”


This: list: gets about 2.5 out of 10 correct. A better list:

1. People want far more at zero prices than they can possibly produce: goods and services have been, are, and almost surely always will be scarce.

2. People respond to incentives.

3. The cost of doing something is the value of the next best alternative foregone. (On the list.)

4 Sunk costs are sunk. (Or, sunk costs should be ignored in making decisions.)

5. Voluntary trade is mutually beneficial. (On the list.)

6. Market s are least-cost allocatiion mechanisms.

7. Future cash flows are worth less than nomimally equivalent current cash.

8. Inflation is, everywhere and always, caused by excessively high money growth.

Craig Newmark

Craig Newmark

Associate Professor of Economics, North Carolina State Univ.

Related Articles

30

Hooray! GDP Up 1.5%

The numbers for the 2nd quarter GDP are out, and some are celebrating, since some expected 1.3% (some expected 1.5%,

24

Unions Sign On To Obama’s Penalizing of Banks

According to The Hill, “several union officials” plan to make Obama’s newest attack on America’s banking industry part of their

2

New York Fires Auditor Who Found Abuse of Federal Hurricane Sandy Funds

No good deed goes unpunished in New York as the state has abruptly cut off a contract with the independent