ECON 2105 Lecture Notes - Lecture 2: Social Safety Net, Opportunity Cost, Tax Refund
Document Summary
Microeconomic vs macroeconomics: macroeconomics, the study of the broader economy, examples. Incentives: factors that motivate you to act or exert effort, people respond to incentives! Direct and indirect incentives: direct incentive, generally easy to recognize. Do my yard work and i"ll give you 40 dollars. Gas station a lower their gas price, more people shop there. Indirect incentives (using second example: lower gas prices cause people to drive more, gas station b responds by lowering their price too. Indirect incentive to stay on welfare rather than work. Incentives to innovate: why work hard, bear all costs (time and monetary) if someone could just steal your idea for profit, result of a strong patent system, more innovation, since people are rewarded for new popular invention. Innovation- economic growth, higher standards of living: life is about trade-offs, decisions imply costs. Loss: less industry, higher prices in some sectors: different cultures may have different values often depends on wealth.
