01:220:102 Chapter 3: Chapter 3_ Optimization_ Doing the Best You Can
chrisfive2005 and 37653 others unlocked
57
01:220:102 Full Course Notes
Verified Note
57 documents
Document Summary
Chapter 3: optimization: doing the best you can. When an economic agent chooses the best feasible option, she is optimizing. Optimization in levels calculates the total net benefit of different alternatives and then chooses the best alternative. Optimization in difference calculates the change in net benefits when a person switches from one alternative to another, and then uses these marginal comparisons to choose the best alternative. Optimization in levels and optimization in differences give identical answers. 3. 1 two kinds of optimization: a matter of focus. Economists believe that optimization describes most of the choices that people, households, businesses, and governments make. Economists don"t always successfully optimize, but economists try to optimize and usually do good with the given information. Optimization implemented using either of two techniques of cost-benefit analysis (both emphasize the concept of net benefit - benefit minus cost) Easier and faster because you focus on key differences between options.