Teaching Principles

King at SCSU Scholars has chimed in on the teaching discussion (which he termed "delightful" :-) ) between John Palmer, John Chilton, and myself. King lists 3 items that econ profs would do well to teach to principles students:

Russell Roberts gave a lecture I heard once many years ago in which he summed up economics as three postulates, which he represented as acronyms:

1. SI -- people act as if motivated by their self interest.
2. NFL -- no free lunch, or more often known as TANSTAAFL.
3. MC=MB --marginal benefit = marginal cost, the notion that rational decision occurs at the margin. The corrolary I always teach is sunk costs or "don't cry over spilt milk", which is something Heyne does so well.

I would add one more corrolary: PRTI -- People respond to incentives.