ECON 1 Lecture Notes - Lecture 10: Sunk Costs, Comparative Statics, Opportunity Cost
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ECON 1 Full Course Notes
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Hw: reader 339-346, experiment 2 (t, 11 pm) Fisherman out at night, for gas. Bring back catch in the morning, can only sell one day. How much is supplied if price is ? (10 fish) How much is supplied if price is ? (10 fish) If price is , sell one fish and profit (+) If price is , sell one fish and loss (-) (which is still better than - from not. Does fixed cost affect short-run supply? (no. Cost is the same whether one sells or not) selling at all) Next step: to minimize damages, optimize, since can"t recover the sunk costs. Sunk cost is not opportunity cost matter on deciding future choices. Only an opportunity cost if it is linked to personal choice, sunk costs should not. 10 fish supplied whatever the price is. Price is , cost is , profit is . Fishing is good, each fisherman catches 3 fish.
