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How Can You Think Like An Economist?

How Can You Think Like An Economist?. The 7 Principles of Economic Thinking Econ Alive Chapter 1 section 3. What is an Economic Enigma?. An economic enigma is a puzzle Something that can be solved using the 7 principles of economic thinking

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How Can You Think Like An Economist?

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  1. How Can You Think Like An Economist? • The 7 Principles of Economic Thinking • Econ Alive Chapter 1 section 3

  2. What is an Economic Enigma? • An economic enigma is a puzzle • Something that can be solved using the 7 principles of economic thinking • One of my former students called it a contradiction. Looks like one thing turns out to be the opposite.

  3. # 1 Scarcity forces trade-offs • Because we cannot get all of the stuff we need or want, we must choose between that which we get and that which we must give up. • Like when selecting that most important of devices the cell phone. Android or iphone?

  4. # 2 Cost Versus Benefit • What will it cost me to select this particular item? • What will I get in return for my Money or time? Cell phone perhaps + data and other costs Will the reward outweigh the financial outlay?

  5. # 3 Thinking at the Margin • Marginal Cost- expenditure for one additional item like shoes or pieces of pizza. • Marginal Benefit- • What do I actually receive when paying for that additional item? Will getting one more for the price be worth it? Maybe I shouldn’t have eaten that 15th piece 

  6. # 4 Incentives Matter • People respond in predictable ways to what Economists call incentives. • Offer a reward for finding someone and more people begin looking. • If you want more people to come to your store… • Or to buy more stuff… Then have a sale  Quid Pro Quo America’s Most Wanted Black Friday following Thanksgiving

  7. # 5 Trade Makes People Better Off • Do you do everything for yourself? • Make your own clothes? Farm your own crops? • Of course not. Why not? TMPBO that’s why!

  8. # 6 Markets Coordinate Trade • If you build it… • Ebay and electronic make all of that easier • They will come… • Amazon . Com also has taken the world by storm Don’t forget malls and outlet malls As well as facebook, twitter, as advertising tools

  9. # 7 Future Consequences Count • Like Playing checkers, there is more to consider than just if you can jump or not… • Perhaps your move will lead your opponent to an even better move… • Or lure him into a trap! Think about what COULD result What’s best in the long run?

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