ECON 2010 Lecture Notes - Lecture 2: Marginal Cost, Marginal Utility, Invisible Hand

• School: CU-Boulder
• Department: Economics
• Course: ECON 2010
• Professor: Richard Peterson

Document Summary

Resources and satiation human beings always want more stuff but have restricted resources satiation is philosophical. 3 thinking @ the margin ppl weight the costs and benefits of each decision rational ppl make choices marginal cost: cost of small change. Benefit: benefit of small change ex. pizza. a rational person would eat 3 pieces of pizza. Davis finds no improvement after penalty program is instituted. On the margin, people will pay more for a used car so they can have multiple license plates beijing program. 2. 5 million cars in 2005 incentives- something that induces ppl to act, the prospect of reward or punishment central incentive of market is prices: Hi prices incentivize sellers to sell more related to monetary prices. Paying ppl for desired behavior (paying ppl to go to school) closely aligned to the policy goal. Taxes on cigs reduce # of smokers incentives sometimes dont work.