The economy works via the interactions of economic agents (interactions of economic choices). Economists claim that pursuing self-interest based on our skills leads to trade based specialization and mutual gains from trade.
- Think of a recent purchasing decision in which you compared the marginal benefits associated with buying a product with the marginal costs. How do you make a rational decision by comparing marginal benefits and marginal costs?
- What is the role of self-interest in free market operations (economic choice interactions)? Why engagement in self-interest may lead to better welfare for the society?