ECN 340 Lecture Notes - Lecture 1: Shool, Marginal Cost, Opportunity Cost
24 Feb 2017
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Anything worth doing may not be worth doing well (economists) It is because the opportunity cost is lower. Be(cid:374)efit(cid:859)s larger: gai(cid:374)s for lo(cid:374)ger period of ti(cid:373)e. Marginal cost is close to 0 if path is already there through the grass: not likely to do more damage. Most people think that if they walk alone on the grass the marginal cost will be close to 0. Thus, a path in the grass is created without anyone wanting it. Each person believes the marginal cost they contribute it low. Polluti(cid:374)g (cid:373)ay (cid:271)e ratio(cid:374)al if others(cid:859) (cid:271)eha(cid:448)iour (cid:272)a(cid:374)(cid:374)ot (cid:271)e (cid:272)o(cid:374)trolled-escalation can occur. Can be ok if no one else is in control. Noise pollution in a restaurant-sound level goes higher and higher. In all these cases the individuals thinks about the potential costs and benefits to himself/herself and acts accordingly. No one in a position to take charge and coordinate. Cost and benefits of driving include probability of getting into an accident.
