When people hear the word “market,” they often imagine a physical place where people buy and sell things. A vegetable market, a stock market, a shopping mall, or a street filled with small shops. But in economics, a market is much broader than a physical location. A market is a system through which buyers and sellers interact to exchange goods, services, or resources. It can exist in a physical p…
How religion, politics, warfare, trade and ambition brought Christian Europe and the Islamic world into centuries of conflict and contact. By the end of the eleventh century, Europe was changing. The great Viking raids had declined. The kingdoms of western Europe were becoming more organized. Towns were growing, trade was expanding and agricultural production was increasing. The Christian Church …
Every economic decision involves a choice between alternatives. This is one of the simplest ideas in economics, but it is also one of the most important. We have already learned that resources are scarce, that people have unlimited or continually expanding wants, and that scarcity forces individuals, businesses, and governments to make choices. Once a choice has to be made, a trade-off exists.A t…
In the previous lessons, we explored why people have to make choices, how scarcity creates trade-offs, what opportunity cost means, and how incentives influence behavior. We have been building toward an important idea that economists use constantly when analyzing decisions: marginal thinking.Marginal thinking means focusing on the additional benefit and additional cost of a decision. Instead of a…
