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Unformatted text preview: Ex: Visiting Mom in Iowa on a business trip to KC. The cost of visiting Mom is only the marginal time and money cost of getting to Iowa from KC. Sunk Cost: Cannot be avoided, regardless of what is done in the future, because they have already been incurred. Marginal cost is the cost of producing one more unit of output* Model: Formal statement of a theory, usually a mathematical statement of a presumed relationship b/w two or more variables. Variable: Measure that can change from time to time or from observation to observation Ockham’s Razor: Principle that irrelevant detail should be cut away *(All else equal: Ceteris Paribus) Common Fallacies: Post hoc ergo propter hoc Correlation vs. Causality Post – If something happens after something else it was caused because of it….Not true Correlation vs. Causality – If you go to the hospital you will die…Not True...
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This note was uploaded on 03/06/2008 for the course ECON 1120 taught by Professor Wissink during the Spring '05 term at Cornell.
- Spring '05