2. The cost of something is what you give up to get it The opportunity cost of an item is what you give up to obtain that item
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. 2. The cost of something is what you give up to get it. The opportunity cost of an item is what you give up to obtain that item
3. Rational people think at the margin. Marginal changes are small, incremental adjustments to an existing plan of action People make decisions by comparing costs and benefits at the margin
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. 3. Rational people think at the margin. Marginal changes are small, incremental adjustments to an existing plan of action. People make decisions by comparing costs and benefits at the margin
4. People respond to incentives o Marginal changes in costs or benefits motivate people to respond. e The decision to choose one alternative over another occurs when that alternatives marginal benefits exceed its marginal costs!
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. 4. People respond to incentives. Marginal changes in costs or benefits motivate people to respond. The decision to choose one alternative over another occurs when that alternative’s marginal benefits exceed its marginal costs!
4. People respond to incentives LA Laker basketball star Kobe bryant chose to skip college and go straight to the nba from high school when offered a S10 million contract
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. 4. People respond to incentives. LA Laker basketball star Kobe Bryant chose to skip college and go straight to the NBA from high school when offered a $10 million contract
5. Trade can make everyone better off People gain from their ability to trade with one another Competition results in gains from trading。 Trade allows people to specialize in what they do best
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. 5. Trade can make everyone better off. People gain from their ability to trade with one another. Competition results in gains from trading. Trade allows people to specialize in what they do best