Different methods can be used to allocate goods and services. People acting individually or collectively through government must choose which methods to use to allocate different kinds of goods and services. Students will be able to use this knowledge to evaluate different methods of allocating goods and services, by comparing the benefits and costs of each method. People respond predictably to positive and negative incentives. Students will be able to use this knowledge to identify incentives that affect people's behavior and explain how incentives affect their own behavior.
Voluntary exchange occurs only when all participating parties expect to gain.
This is true for trade among individuals or organizations within a nation, and usually among individuals or organizations in different nations. Students will be able to use this knowledge to negotiate exchanges and identify the gains to themselves and others. They will be able to compare the benefits and costs of policies that alter trade barriers between nations, such as tariffs and quotas. When individuals, regions, and nations specialize in what they can produce at the lowest cost and then trade with others, both production and consumption increase. Students will be able to use this knowledge to explain how they can benefit themselves and others by developing special skills and strengths.