Group Japan - 10 Principles

principle 1people face tradeoffs

Villamor

man has unlimited wants

and needs

resources are

scarce and

limited

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Juan wants to buy many things.

He has 300 pesos to spend.

Php300=

6 burgers

Php300=

11 liters

Php300=

1 text book

If Juan decides to buy the text book

he will have to give up the 6 burgers

and 11 liters of Coke

Principle 2: Opportunity Cost

The cost of something is what you give up to get it

Zamora

2 choices—A or B

(you pick A)

Choice A Choice B

WHAT YOU GET

OPPORTUNITY COST

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Rational People Think At The Margin

Principle # 3

Villanueva

Calaranan

Calaranan

Principle 6Markets Are Usually a Good Way to

Organize economic Activity

Reyes

{

Governments Can Sometimes Improve Market Outcomes

Principle # 7

Villanueva

Principle 8: A Country’s Standard of Living Depends on its Ability to

Produce Goods and Services

Productivity: the quantity of goods and services produced from each hour of a

worker’s time

Zamora

More goods and services produced per hour of working time

Higher the overall income of the country (so more needs can be provided for)

Better standard of living for people

Principle 9Prices Rise When the Government

Prints too much Money

Joseph

principle 10Society faces a short-run tradeoff between inflation and unemployment

Villamor

increase in

employment

more money

to spend

increase in

demand

increase in

prices

increase in

spending

less money

to spend

decrease in

spending

decrease in

employment

decrease in

demand

decrease in

prices