Five videos from The EDvantage curriculum hub explaining basic economic thinking. 

Basic Economic Principles

1. "Economics on One Foot"

Professor Art Carden overviews the basic principles of economics while standing on one foot. He discusses: 

  • Individuals strive to achieve their goals in the best ways possible. 
  • Every action has a cost. 
  • Incentives matter. 
  • Value is determined on the margin. 
  • Profits and losses help gauge value creation and destruction.
  • Government interventions often have unintended and undesirable consequences. 

2. “The Economic Way of Thinking”

Dr. Anthony Carilli explains the economic way of thinking. He covers:

  • The origin of all social phenomena
  • What makes up human action
  • Actions, interactions and choice

3. “Opportunity Cost – Investopedia”

Investopedia explains the basic economic principle of opportunity cost: every action has a cost, even the actions that are not pursued. It also explains how to calculate opportunity cost.

4. "Thinking at the Margin"

Why are diamonds more expensive than water? Professor Mario Villarreal-Diaz answers this question using what economists call marginal analysis. Essentially, the marginal utility of water decreases faster than the marginal utility of diamonds. Put another way, people face decisions in a particular context and time. In modern economies, people have ready access to water on the margin, but do not have the same level of access to diamonds.

5. "The Broken Window Fallacy"

Professor Art Carden explains the "broken window fallacy", a term coined by Frederic Bastiat. When a shopkeeper's window is broken, he will spend money on a new window, which gives income and jobs for glaziers. This activity is "seen," but the "unseen" is just as important: the money spend on a new window could have been spent on other things. Wealth has not increase, but only reallocated from some people to others, and society is worse off by one window.

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