The 12 Principles of Economics:

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.

5.There are gains from trade.

6.Because people respond to incentives, markets move toward equilibrium.

7.Resources should be used as efficiently as possible to achieve society's goals.

8.Because people usually exploit gains from trade, markets usually lead to efficiency.

9.When markets don't achieve efficiency, government intervention can improve society's welfare.

10. One person's spending is another person's income.

11. Overall spending sometimes gets out of line with the economy's productive capacity.

12. Government policies can change spending.

Scenarios

1.Even though generally more expensive, energy efficient appliances and vehicles sell better with a rebate or tax credit.

2.Airlines will charge a fee for each additional suitcase you may want to take with you on a trip.

3.At a restaurant, when ordering an entre, you get to choose two side dishes from a group of five side dishes.

4.Instead of growing your own food and making other necessities you decide to specialize in a particular profession and purchase things, even things that you would have not been able to make yourself.

5.There is an incredible variety of goods and services available at many different price points even though no single entity or government is deciding or dictating the market what to do.

6.In its effort to limit the effects of rising inflation, the Federal Reserve System reduces the quantity of money in the economy, but sees an increase in unemployment

7.While consuming the same amount of farmers' labor and capital the newly developed hybrid crops achieve twice the yields of the previous crops.

8.You have noticed that the same amount of money buys you fewer goods and services than it did a year ago.

9.You worked for extra pay on a holiday and therefore missed out on your neighbor's' barbeque.

10. Two major suppliers of powdered baby food formula are challenged by government on grounds of price fixing.