Os Dez Mandamentos

1. E verything has a cost. There is no free lunch. There is always a trade-off.

2. C ost is what you give up to get something. In particular, opportunity cost is cost of the trade-off.

3. O ne More. Rational people make decisions on the basis of the cost of one more unit (of consumption, of investment, of labor hour, etc.).

4.i N centives work. People respond to incentives.

5. O pen for trade. Trade can make all parties better off.

6. M arkets Rock! Usually, markets are the best way to allocate scarce resources between producers and consumers.

7. I ntervention in free markets is sometimes needed. (But watch out for the law of unintended effects!)

8. C oncentrate on productivity. A country’s standard of living depends on how productive its economy is.

9. S loshing in money leads to higher prices. Inflation is caused by excessive money supply.

10. !! Caution: In the short run, falling prices may lead to unemployment, and rising employment may lead to inflation.

Gordon Boronow, PhD, FSA,Assistant Professor,Nyack College