ECON-2000 Lecture Notes - Lecture 1: Inferior Good, Monopsony, Final Good
2 Sep 2016
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1: life is about trade-offs, opportunity costs, marginal thinking, trade creates value, incentives: factors that motivate you to act. Positive (pay raise, employee of the month) Negative (taxes, jail, fees, fines, failing class, getting fired) Direct (come to our party and get pizza) Indirect (less incentive to stay home and eat healthy: trade offs: give up something in order to get something else. Spending money on college instead of putting it somewhere else. To keep china"s air clean, shut down factories and restrict transportation: opportunity costs: the highest valued alternative that must be sacrificed, the next best alternative. Go to a concert or go hiking. Select the choice that gives the largest benefit (minimize the opportunity cost: marginal thinking: evaluating whether benefit of one more unit of something is greater than the cost. Going 66 mph instead of 65 mph will get you there faster, but risk of getting pulled over: markets bring buyers and sellers together.
