This document discusses several economic principles: 1. People face tradeoffs because resources are limited while wants and needs are unlimited. This means people must choose between alternatives. 2. Opportunity cost refers to the next best alternative given up when a choice is made. It is the cost of something measured in terms of what is sacrificed or lost to acquire it. 3. Rational people think at the margin, meaning they consider small or incremental changes in decisions rather than large or extreme changes.

1. principle 1
people face tradeoffs
Villamor

2. man has
unlimited
wants and
needs
resources
are scarce
and
limited
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Juan wants to buy
many things.
He has 300 pesos
to spend.
Php300= 6
burgers Php300= 11
liters
Php300= 1
text book
If Juan decides to buy
the text book he will
have to give up the 6
burgers and 11 liters
of Coke

3. Principle 2: Opportunity Cost
The cost of something is what you
give up to get it
Zamora

4. 2 choices—A or B
(you pick A)
Choice A Choice B
WHAT YOU
GET
OPPORTUNITY
COST

5. {
Rational People
Think At The Margin
Principle # 3
Villanueva

7. Calaranan

9. Calaranan

11. Principle 6
Markets Are Usually a Good Way to
Organize economic Activity
Reyes

13. {
Governments Can
Sometimes Improve
Market Outcomes
Principle # 7
Villanueva

15. Principle 8: A Country’s Standard of Living Depends on
its Ability to Produce Goods and Services
Productivity: the quantity of goods and
services produced from each hour of a
worker’s time
Zamora

16. More goods and services
produced per hour of working
time
Higher the overall income of
the country (so more needs
can be provided for)
Better standard of living for
people

17. Principle 9
Prices Rise When the Government
Prints too much Money
Joseph

19. principle 10
Society faces a short-run
tradeoff between inflation
and unemployment
Villamor

20. increase
in
employment
more
money to
spend
increase
in
demand
increase
in pricesincrease
in
spending
less
money to
spend
decrease
in
spending
decrease
in
employment
decrease
in
demand
decrease
in prices