{"id":128,"date":"2025-06-11T10:12:01","date_gmt":"2025-06-11T14:12:01","guid":{"rendered":"https:\/\/people.bsu.edu\/econbriefs\/?p=128"},"modified":"2025-06-11T10:12:01","modified_gmt":"2025-06-11T14:12:01","slug":"top-10-microeconomics-concepts-every-citizen-should-know-by-dr-cecil-bohanon-and-dr-john-horowitz","status":"publish","type":"post","link":"https:\/\/people.bsu.edu\/econbriefs\/2025\/06\/11\/top-10-microeconomics-concepts-every-citizen-should-know-by-dr-cecil-bohanon-and-dr-john-horowitz\/","title":{"rendered":"Top 10 Microeconomics Concepts Every Citizen Should Know \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"},"content":{"rendered":"<p><span data-contrast=\"auto\">What economic concepts are most important for citizens? Here is our top-ten list of microeconomic concepts.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">First, scarcity means we cannot get all we want for free. There must be some method of rationing. Prices, waiting in line, favoritism, taking turns, brute force, or something else will emerge to ration goods and services.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Second, when competitive markets are used to deal with scarcity, prices indicate the degree of scarcity. Rising prices of resources, goods, or services indicate increasing scarcity, and falling prices indicate declining scarcity.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Third, in competitive markets, surpluses are a sign that the price is too high, and shortages are a sign that the price is too low. Price changes eliminate the imbalances.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Fourth, rising prices persuade consumers to buy less and producers to produce more. Falling prices do the opposite. Using prices to persuade buyers and sellers is usually preferable to coercion.\u00a0\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Fifth, when a firm earns economic profits, within the confines of the \u201crule of law,\u201d the firm is providing the consumer more value or using fewer resources. In a free market, economic profits attract new entrants, eventually undermining the profits that induce entry. Profits tend to dissipate because of competition.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Sixth, when there are no close substitutes for a firm\u2019s products, it can charge more and make more profits in the short term. However, in the long run, the profits attract competitors who provide better substitutes, reducing profits.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Seventh, with limited information, it is hard to predict where people should invest to make profits. Greater uncertainty means profitability may depend more on luck than skill. Also, with more uncertainty, scammers, cheaters, and con artists are likelier to take advantage of others.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Eighth, when someone else pays, such as parents, the government, or insurance, people care less about the price, so they buy more and want better quality. Firms can and will charge higher prices when people do not care about the price. That is why insurance companies often expect the insured to pay part of the cost.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Ninth, tradeoff means balancing two or more things. In healthcare, there is often a tradeoff between cost, quality, and access. For example, increasing quality often increases healthcare costs and reduces access.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Tenth, successful entrepreneurs create innovative products and new production and distribution methods that make consumers better off in the long run. However, most attempts at entrepreneurship fail.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Of course, the scarcity created by a top-ten list leaves out many other vital concepts!\u00a0\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What economic concepts are most important for citizens? Here is our top-ten list of microeconomic concepts.\u00a0\u00a0 First, scarcity means we cannot get all we want for free. There must be some method of rationing. Prices, waiting in line, favoritism, taking turns, brute force, or something else will emerge to ration goods and services.\u00a0\u00a0 Second, when [&hellip;]<\/p>\n","protected":false},"author":112,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[462],"tags":[303,1232,1233,1229,910,1227,1028,1228,609,1231,1230],"class_list":["post-128","post","type-post","status-publish","format-standard","hentry","category-microeconomics","tag-competition","tag-consumer-behavior","tag-economic-education","tag-entrepreneurship","tag-markets","tag-microeconomics","tag-prices","tag-profits","tag-scarcity","tag-tradeoffs","tag-uncertainty"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Top 10 Microeconomics Concepts Every Citizen Should Know \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/people.bsu.edu\/econbriefs\/2025\/06\/11\/top-10-microeconomics-concepts-every-citizen-should-know-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Top 10 Microeconomics Concepts Every Citizen Should Know \u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\" \/>\n<meta property=\"og:description\" content=\"What economic concepts are most important for citizens? 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