Ten Principles of Economics
Principle 1: People Face Trade-offs
Time and school are good example of trade offs. I would like to be more successful so I invest my time and money into Phoenix to achieve my goal of success and wealth by moving to management.
Principle 2: The Cost of Something Is What You Give Up to Get It
Living in the United States requires an amount of money to be a citizen via taxes. I want to live in the best country in the world I pay my way thru taxation; albeit thru payroll taxes, hidden taxes in goods and services, social security, state and local taxes. I am willing to give up that money to live a somewhat free life with all the protections and benefits that go along.
Principle 3: Rational People Think at the Margin
A great example would be buying a car. You buy a car for primarily one purpose, which is to move from one place to another at your convenience. The margin is the comfort vs. cost. I live in Florida so I would need AC and probably tinted windows. The roll-up window cranks get hot in the summer so power windows are a must. All the extras add up but I feel I need them to be comfortable while I drive from one place to the other.
Principle 4: People Respond to Incentives
I chose to take a larger and more costly healthcare plan so I could reduce my taxable income. Sure the extra money would be great but I would be penalized for earning that money. Working overtime taxation is another incentive not to work overtime, although I don’t mind, I don’t want to give 50% of that overtime to Uncle Sam.
Principle 5: Trade Can Make Everyone Better Off
This is were I get off the train; I just cannot bring myself to but a foreign car. I have become a bit of a pariah for my beliefs and hear all the frequent arguments for buying a Toyota. They are made in America, they are better quality but, I don’t see it that way. The cars may be made in America by Americans but the money ends up in our competitors hands…quality is...