What are the key concepts in economics?


Scarcity (which has a distinct meaning in economics). Without scarcity there is no economics.
People act to better their conditions
Value is subjective, exchange occurs because different people place different values on the same thing.
Decisions are made based on marginal costs and marginal benefits, not based on averages.
When they have even a little liberty and security, humans interact to create a self-regulating system (an Autopoietic system, which is what Smith meant with his “invisible hand” simile, but Smith wrote 200 years before the term was coined. Autopoiesis - Wikipedia) This system functions in much the same way as a natural ecological system (also Autopoietic).
All human action is undertaken to solve some problem or address some desire. Even scratching an itch.
Pretty much everything else derives from these basics, and makes little sense if the basics are forgotten.


We nominate these ten concepts:
  1. Incentives Matter.
  2. Opportunity Cost
  3. Markets
  4. The Price System
  5. Comparative Advantage & the Power of Trade
  6. Division of Labor
  7. Emergent Order
  8. Externalities
  9. The Economic Way of Thinking About Politics
  10. Unintended Consequences