5 Basic Principles of Economics

Thinking Like an Economist

  • Swiftonomics: Economic Ideas and Taylor Swift

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    Taylor Swift is accused of causing inflation. She also represents an innovative organization worth more than US$1,000,000,000. Beyond this high-level perspective on her impact, many teachers are using her career to demonstrate old economic ideas more memorably. Some instructors offer entire courses in university [1] [2] [3] [4] [5] and at the high school level.…

  • “It’s what you learn after you know it all that counts.”

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    This quote, from a successful basketball coach, reveals an aspect of learning which is poorly understood by people who have spent “too much” time in school. Teachers try to teach as much as possible because, in part, they know that there is so much more to learn. Even so, some students think that what they…

  • Fast Food and Downward-Sloping Demand Curves

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    A pair of recent news articles concerning popular fast-food restaurants noted differences for different brands. First, McDonald’s restaurants are changing tactics because consumers (in the US especially) are feeling stressed by the economy. Second, even if the Canadian economy is also performing poorly, Restaurant Brands International Inc. (RBI, which oversees Tim Hortons, Burger King and…

  • The Margins Principle

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    Economics is about behaviour and behaviour is about decisions. The margins principle is a reminder that most decisions involve concern small variations in a margin of adjustment. This idea is probably the second big lesson taught to students in their first economics course. In classes, this principle is seen in jargon such as “marginal utility”,…

  • The Equilibrium Principle

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    The only relevant behaviours by members of a group of participants are those which are compatible with one another. Behaviours that are not compatible with the behaviours of others (e.g., with competitors and with the other side of the market) are not sustainable, regardless of the intentions of any one individual. Most people are familiar…

  • The Gains from Trade Principle

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    Most economic activities involving more than one person are not “zero-sum games”. They involve trading of some kind. Production without consumption is a waste and consumption without production is impossible. This perspective is not isolated to economics. Marketers encourage firms to adopt a “marketing orientation”, in which a firm seeks a profitable strategy which creates…