1. People must make choices because resources are scarce. |
2. The opportunity cost of an item—what you must give up in order to get it—is its true cost. |
3. “How much” decisions require making trade-offs at the margin: comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less. |
4. People usually respond to incentives, exploiting opportunities to make themselves better off. |