1. People can’t have everything they want, so they choose. 2. People make better decisions when they weigh the present and future benefits and costs of alternatives. 1. Scarcity, alternatives, choice, personal responsibility 2. Goals, alternatives, marginal benefits, marginal costs, choice 9 P R I N C I P L E S O F E C O N O M I CS E C O N O M I C S V O C A B U L A R Y

3. Every choice involves cost. 4. People respond to incentives in a predictable manner. 3. Opportunity cost, marginal cost, transaction cost, sunk cost 4. Property rights, profits, prices, taxes, subsidies, and non- monetary incentives 9 P R I N C I P L E S O F E C O N O M I CS E C O N O M I C S V O C A B U L A R Y

5. Voluntary exchange benefits the traders. 6. Markets work best when competition, incentives, information, and property rights exist. 5. Domestic and international trade, money, foreign exchange 6. Supply, demand, relative prices, entrepreneurship, profit, perfect competition, monopoly, market failures 9 P R I N C I P L E S O F E C O N O M I CS E C O N O M I C S V O C A B U L A R Y

7. People’s skills influence their income. 8. Monetary and fiscal policies influence the economy. 7. Human capital, productivity, supply, demand, relative wages, labor market failures 8. Real gross domestic product, economic growth, consumer price index, interest rates, unemployment and job creation 9 P R I N C I P L E S O F E C O N O M I CS E C O N O M I C S V O C A B U L A R Y

9. Government economic policies have both benefits and costs. 9. Public choice, price controls, regulation and deregulation, government failures 9 P R I N C I P L E S O F E C O N O M I CS E C O N O M I C S V O C A B U L A R Y