6 Economic Principles

1. People Economize. People choose the alternative

which seems best to them because it involves the
least cost and the greatest benefit.
2. All choices involve cost. Cost is the second best
choice people give up when they make their best
choice.
3. People response to incentives. Incentives are
actions or rewards that encourage people to act.
When incentives change, peoples behavior changes
in predictable ways.
4. Economic systems influence individual choices
and incentives. How people cooperate is governed
by written and unwritten rules. As rules change,
incentives change and behavior changes.
5. Voluntary trade creates wealth. People can
produce more in less time by concentrating on what
they do best. The surplus goods or services they
produce can be traded to obtain other valuable
goods and services.
6. The consequences of choices lie in the future.
The important costs and benefits in economic
decision making are those which will appear in the
future. Economics stressed making decisions about
the future because it is only the future that we can
 influence. We cannot influence things that have
happened in the past.

Economics Economic Literacy Project

Purpose: This activity is designed to increase the linkage between theory in economics and the
economy we participate in daily. You will use your classroom knowledge to analyze and predict
activity in the market.

Assignment Value: 35 points

Once per Month you are expected to submit an analytical summary of an economic-related
article or news story. The summary should be at least 3 paragraphs and 1-2 pages in length
(double spaced).

The following should be included in each review

1. Citation (5)
2. Summary (10): An overview of the article and its topic discussed within. What is being
produced? Where is there a problem?
3. Indication and explanation of the 6 Economic Principles of Economics (10)
a. People economize
b. All choices involve cost
c. People respond to incentives
d. Economic systems influence individual choices and incentives
e. Voluntary trade creates wealth
f. The consequences of choices lie in the future
4. Personal Reaction (10)
a. Do you support this action? Why or why not?
b. How does this relate to class?
c. Predict what can occur to this situation in the future

Sources: You are encouraged to use these sources:

Newspapers
News magazines
Internet (must provide the web address and print the article)
Journals