Ten Key Concepts to RetAin for a Lifetime

Suppose you unexpectedly meet your introductory economics professor on the street five or ten years after you complete this course. What will you be able to tell her you retained from the course she taught? More than likely you will not be able to remember very much. To help you retain the main ideas that economics has to offer for many years after you complete it, we have come up with Ten Key Concepts we believe are essential to understand the world around you and help you in your chosen career. These key concepts will be reinforced throughout the textbook. When a key concept is about to be discussed you will be alerted with an icon and the concept description.

The 10 key concepts will simply be listed here; elaboration on each of the key concepts will be found as we progress through the textbook. At the end of the course you should review these 10 key concepts. They will help you organize and better understand the materials you have studied. We have divided the 10 key concepts into three categories: (a) those pertaining to the individual; (b) concepts that explain the interaction among individuals; and (c) concepts that deal with the economy as a whole and the standard of living.

The Individual

CONCEPT 1 ("Facing Tradeoffs"): Scarcity in relation to wants means you face tradeoffs; therefore you have to make choices.

CONCEPT 2 ("Opportunity Costs"): The cost of the choice you make is what you give up for it, or the opportunity cost.

CONCEPT ("Choosing a Little More or Less"): Choices are usually made at the margin; we choose a "little" more or a "little" less of something.

CONCEPT 4 ("The Influence of Incentives"): The choices you make are influenced by incentives.

Interaction Among Individuals

CONCEPT 5 ("Specialization and Trade"): Specialization and trade will improve the well-being of all participants.

CONCEPT 6 ("The Effectiveness of Markets"): Markets usually do a good job of coordinating trade among individuals, groups, and nations.

CONCEPT 7 ("The Role of Governments"): Governments can occasionally improve the coordinating function of markets.

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