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03-class notes

03-class notes - Comm 394 Government and Business TODAY...

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9/11/2009 1 Comm. 394: Government and Business TODAY – Class 3 Finish Basic Economic Concepts:- Brander (2), Please take your own photo in PC lab - MSRC (Math/Stats Please take your own photo in PC lab MSRC (Math/Stats Resource Centre), on Agricultural Road across from LSK Worth 1 mark if done before Wed Sept 23 NEXT CLASS Philosophical foundations: Brander (3, pp 23-30) Brander (6- pp 133-138- rule of law Brander (3 – Market failure: monopoly and public goods ); Brander (3 – Market failure: monopoly and public goods ); (16- pp. 428-431- public goods). background reading- Brander (6, pp 118 - 121) – perfect competition and monopoly Comm 394: Barbara Spencer Elect Class Liaison Volunteers?
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9/11/2009 2 Four Basic Concepts 1. Opportunity Cost 2 M i li 2. Marginalism 3. Efficiency 4. Incentives Comm 394: Barbara Spencer 2. Marginalism ¾ Consider: "Education is more important than highways; therefore, more money should be spent h l d l d " on schools and less on roads." Comm 394: Barbara Spencer
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9/11/2009 3 ¾ Marginalist Principle : Any policy or activity should be carried out if the marginal benefit exceeds the marginal opportunity cost. ¾ Private firms use private costs and benefits. Maximize Private firms use private costs and benefits. Maximize profit: MR (marginal revenue)= MC. ¾ Governments should use social marginal benefits and costs.
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