ECN 340 Lecture Notes - Lecture 2: Marginal Cost

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Anything worth doing may not be worth doing well! People do things less well because of the added (marginal) cost. Writing a c" paper is less costly than writing an a" paper. Value of professor and students are different. Young"s benefits larger gains for longer period of time. Grass may be a short cut, thus can bring benefits. Marginal cost is close to zero if the path already there. Most people think that if they alone walk on the grass, the marginal cost will be close to zero. Thus, a path in the grass is created without anyone wanting it. Polluting may be rational if other"s behavior cannot be controlled escalation can occur. In all these cases the individual thinks about the potential costs and benefits to himself/herself and acts accordingly. No one in a position to take charge and co-ordinate. Cost and benefits of driving included probability of getting into an accident.

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