Six Key Economic Principles: The Handy Dandy Guide 1. People choose. 2. People’s choices involve costs. Key idea: Opportunity cost 3. People respond to incentives in predictable ways.

Six Key Economic Principles: The Handy Dandy Guide 4. People create economic systems that influence individual choices and incentives 5. People gain when they trade voluntarily.

Six Key Economic Principles: The Handy Dandy Guide 6. People’s choices have consequences that lie in the future. Exercise: applying the HDG Why would people who sell cars not want to sell them on Sunday?

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Scarcity and Opportunity Cost Two definitions of scarcity: 1. A situation in which human wants are greater than the capacity of available resources to provide for those wants. 2. A situation in which a resource has more than one valuable use.