The document outlines 10 principles of economics according to Dr. Kishor Bhanushali. The principles are: 1) People face trade-offs, 2) The cost of something is what you give up to get it, 3) Rational people think at the margin, 4) People respond to incentives, 5) Trade can make everyone better off, 6) Markets are usually a good way to organize economic activity, 7) Government can sometimes improve market outcomes, 8) A country's standard of living depends on its ability to produce goods and services, 9) Prices rise when government prints too much money, and 10) Society faces short-term trade-offs between inflation and unemployment. Examples and implications of each principle

1. Ten Principles of
Economics
Dr. Kishor Bhanushali
Unitedworld School of Business
Gandhiangar

2. Principle 1: People Face Trade-offs
 To get something that we like, we usually have to give up something else that
we also like
 Allocation of scarce resources
 Student
 Family
 Guns and Butter
 Trade off between efficiency and equality

3. Principle 2: The Cost of Something is
What You Give Up to Get it
 Cost and benefits of making decisions
 Cost and benefits of going to college
 Opportunity cost

4. Principle 3: Rational People Think at the
Margin
 Rationality assumption
 Marginal cost and Marginal benefits
 Small incremental adjustment in plan
 Marginal change
 Last minute ticket for airlines
 Marginal worker
 Water diamond paradox

5. Principle 4: People Respond to
Incentives
 Incentive: Prospect for punishment or reward
 “People respond to incentive. The rest is commentary”
 Higher price provide buyer to buy less while provide incentive to seller to sell
more
 Incentive influence the behavior of economic agents
 Very important for public policy
 How does seat belt law affect auto safety?

6. Principle5: Trade Can Make Everyone
Better Off
 Competition between individuals
 Competition between families
 Competition between countries
 Self reliance and interdependence
 Specialization and Trade

7. Principle 6: Markets Are Usually a Good Way
to Organize Economic Activity
 Market economy v/s Planned economy
 Adam Smith : Invisible Hands
 Government intervention and market distortions

8. Principle:7 Government Can Sometimes
Improve Market Outcomes
 Invisible hands v/s role of government
 Enforcement of rules
 Maintaining institutions which are necessary for market economy to function
 Enforcement of Property Rights
 Market failure
 Externalities
 Market power

9. Principle:8 A Country’s Standard of Living
Depends on Its Ability to Produce Goods and
Services
 Difference in per capital income and economic growth across world
 Difference in standard of living among countries
 Difference in productivity
 The quantity of goods and services produced from each unit of labour
 Implications for public policy: education, technology etc.

10. Principle 9: Prices Rise When
Government Prints Too Much Money
 Money supply and Inflation
 Value of money
 Inflation and Hyperinflation
 Too much money chasing too few goods
 Implication for monetary policy

11. Principle 10: Society Faces Short Term Trade-
off Between Inflation and Unemployment
 Increase quantity of money
 Higher prices
 More profit for producers
 More output
 More jobs
 Implication for policy making

12.  Give three examples of trade offs that you have faced in life?
 How do you solve water diamond paradox?
 Why productivity is important?
 How inflation and unemployment are related?
 Why foreign trade is important?
 What do we need government to play role in market?
 What is invisible hands?
 What do you mean by market failure?
 Money matters?