1. Society's wants are unlimited, but ALL resources are limited (SCARCITY)
2. Due to Scarcity,, choices must be made. Every choice has a cost. (A TRADE OFF)
3. Everyone's goal is to make choices that maximize their satisfaction. Everyone acts in their own "selfish interest"
4. Everyone Makes decisions by comparing marginal costs and marginal benefits of every choice.
5. Real life situations can be explained and analyzed through simplified models and graphs