Economics

Economic Concepts There are four broad economic concepts that are connecting themes throughout the course: There are four broad economic concepts that are connecting themes throughout the course: Gain from trade Gain from trade Incentives Incentives Interdependency Interdependency Scarcity Scarcity

Gain from Trade Parties trade voluntarily when they expect to gain. Parties trade voluntarily when they expect to gain.

Incentives Parties respond predictably to positive and negative incentives. Parties respond predictably to positive and negative incentives.

Interdependency Because of interdependency, a decision made by one party has intended and unintended consequences on other parties. Because of interdependency, a decision made by one party has intended and unintended consequences on other parties.

Scarcity Scarcity of all resources forces parties to make choices and those choices always incur a cost. Scarcity of all resources forces parties to make choices and those choices always incur a cost.

The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics. The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics. -Thomas Sowell (American economist, professor at Stanford) -Thomas Sowell (American economist, professor at Stanford)