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Guide to The Economic Way of Thinking

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  • 1. quot;                        quot;        Two people are walking, one an economist, and they see a $100  bill on the ground.   The economist says: quot;That cannot be a $100 dollar billquot; quot;Why not?quot; asks the younger employee?  quot;If it werequot; said the economist, quot;someone would have picked it up  by nowquot;  The quot;no cash on the tablequot; principle holds that freely available  money seldom sits unclaimed for long In the future and the past, the only way to make real money will be  through some combination of talent, hard work, and luck 1
  • 2. THE GUIDE TO ECONOMIC THINKING 1. People choose for good reasons 2. Everything has a cost 3. Incentives matter 4. People gain when they trade voluntarily 5. Human wants are insatiable ­ we all want more  of something 6. The price of a good is affected by peoples  choices 2
  • 3.                  Do You Think Like An Economist?  1. The best things in life are free.  A. True B. False 2. The largest cost of going to college is tuition, room, and board.  True A. False B. 3. If someone makes an economic gain, someone else loses.  True  A. False B. 4. If one nation makes everything better and faster than another nation, there is no  economic reason for these two nations to trade.  True A. False B. 5. Life is priceless.  True A. False B. 3

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