Decision-makers have to consider both the obvious and implicit costs of their actions. Rational People Think at the Margin. A rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost. People Respond to Incentives. Behavior changes when costs or benefits change.
Trade Can Make Everyone Better Off.
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. Markets Are Usually a Good Way to Organize Economic Activity. The opposite of this is economic activity that is organized by a central planner within the government. Governments Can Sometimes Improve Market Outcomes.