Mankiw’s ten principles of economics

Economic principles refer to the ideas that govern the ?principles of economic life?. According to Harvard Professor N. Gregory Mankiw, these principles may be consolidated under 10 heads and refers to how the economy works and what factors influence the economic decisions of people.

This principle stems from the scarcity of resources. Thus one must decide how to distribute these scarcities. When we make economic decisions, we are obliged to give up something in order to have something else. Choosing to make a particular economic decision over another involves a tradeoff.

[...] The costs and benefits of using the tram were influenced by lowering the tram fare in summer. A commuter would compare the costs and personal benefits resulting from this initiative and would therefore be more likely to take the tram or bus. Principle No. Trade Trade allows each person to specialize in the activities he or she does best. By trading with others, people can buy a greater variety of goods or services. The rules that govern trade determine the nature of an economic system. [...]

[...] The existence of a market power The ability to influence prices qualifies an agent to be considered as Market power. An example of a market power is a monopoly where the company has the ability to set prices owing to a lack of competition. In these cases, government intervention in the economy may be justified to improve market outcomes. The intervention of the state is thus legitimized. Principle No.8: Productivity The productivity of a country determines the living standards of its citizen. [...]