ECON 2020 Lecture Notes - Lecture 2: Marginalism, Opportunity Cost
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Example: o. c. of class => i: monetary: money for transportation, forgone earned money, money for supplies, tuition. Non-monetary: another class, sleeping, being at home iii: key issue: scarcity creates o. c. because resources are limited, you have to choose somethings over others. 2/4/19: you do what makes you better off, as opposed to altruistic behavior: you do something that does not benefit you-but helps someone else. Incentives: something that gets you to act in the desired way, positive incentives: reward if you act in a certain way, negative incentives: punishment if you don"t act a certain way i. ii. Good incentives: appeal to your self-interest: how do we choose, marginal analysis: the process of deciding how much of something to do by looking at it one by one unit at a time. Ex. one slice of pizza at a time: compare the benefits and the cost of each unit to determine whether to keep going or stop i.
