ECON 1000 Lecture Notes - Lecture 2: Dont, Opportunity Cost, Externality
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ECON 1000 Full Course Notes
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Trade-off cont. - when there are more choices, our decision-making skills weaken. Changing the rules of the game are in response to how the game is being played (ex. when buying silver, you have to buy at 20% rather than 10%) When you change the nature of the product, the market changes (ex. Ford installed high-end gadgets into affordable cars, instead of only being available in the best cars (mercedes)) If the marginal benefits exceed the marginal costs: do it! If the marginal costs exceed the marginal benefits: don"t do it! Moral hazard: ability to engage in a risky operations and put the risk onto someone else (u. s gov"t put risk on taxpayers??) Positive statements: can be verifiable or tested by fact/research. Normative statements: cannot be proven (religious beliefs) slide13: correlation between two ideas does not mean one causes the other (ex. after the rooster calls, the sun comes up.
