Key Principles of Economics

Economic principles are cumulative. You can start from a few key principles and build on those to derive more sophisticated insights. This article gives a brief overview of some of the most important economic principles.

Fundamentally, economics is about choices, and the consequences of making certain choices. The basic principles that are discussed here aim to encourage thinking about some types of choices – what do we give up by making a certain choice, what benefit do we get from that choice, and if we have alternate choices, how do we choose between them?

Click on the following links to learn more about:

• Opportunity cost
• Efficiency
• The law of diminishing returns
• Marginal costs and marginal returns
• Market equilibrium
• Markets, market prices, and market regulation
• Market pricing and externalities
• Comparative advantage and trade

This list really only scratches the surface. Fortunately, there are many resources available if you want to learn more.