Intro to Microeconomics_Agnello_Date_021610

Intro to Microeconomics_Agnello_Date_021610 - Table 1 - Ten...

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Table 1 - Ten Principles of Economics # 3 Marginal Analysis - Usually decisions are made at the margin (the end) and not all or nothing . - Especially short run decisions - Economic approach to decision making - Compare benefits to costs - Is MB >, = , < MC? - Examples: - Eating - extra portions vs whole - Studying - a little more or less - Business - produce a little more/less vs stay in business - ES Airline - extra passengers or not - AC = $500 - MC = 0 - Note: in the long run AC is relevant otherwise go out of business #4 Incentives Important to People - Give people more incentives for something and they will do more of it ( more benefit and/or less cost) - e.g.g higher gas prices will have the following effects: - drive less - smaller cars - hybrid cars - Indirect effects: - Change job, change home, buy more motorcycles and bicycles - Some indirect effects may be harder to predict and surprise you Incentive Examples - Seatbelt/Airbag (safety mandate) - “Ceteris Paribus” -> fewer injuries (vehicle occupants) (less severe)
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Intro to Microeconomics_Agnello_Date_021610 - Table 1 - Ten...

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