ECON 4535 Lecture 1: Day04-05
16 Feb 2019
School
Department
Course
Professor
Document Summary
Modeling: we want simplicity without losing reality, assumptions: should be well-founded and helpful. We need to keep in mind any limitations an assumption puts on the model: the model should be able to explain, not just describe, rationality: people try to make choices that yield greater benefits. Value = wtp: determinants of wtp, preferences, tastes can change (e. g. richer countries might demand more environmental quality), preferences are affected by one"s surroundings, influences, knowledge and experience. Preferences include altruism, civic duty, etc: ability to pay (income) ability to pay depends primarily on an individual"s previous choices. Ability to pay can be a factor with atypical g/s (e. g. natural resources), and with some items internationally. In typical market, the benefits accuse only to those who purchase or acquire the g/s, but sometimes benefits accuse to those who are not involved in the production or the consumption of the g/s.
