As the new year gets underway, why not make a goal to read more about the essential economic principles. While there are many aspects of free market capitalism that are integral to understanding the field, these are a few concepts that will be most helpful to know as you continue to study free market economics.
Subjective Value: Only individuals can determine the value of good or service.
Sunk cost fallacy: The misconception that one must continue an endeavor because of the time and resources already invested.
Spontaneous order: The belief that when individuals are left to their own devices without a central authority the will create organic order out of chaos without any coordinated effort.
Knowledge problem: It is impossible for one person or group to have enough knowledge to plan entire economies. This can never be possible since the information necessary for this to occur is decentralized among individuals.
Broken window fallacy: Is the misconception that destruction stimulates the economy.