CMN 279 Lecture Notes - Lecture 8: Taco, Marginal Utility, Marginal Cost

• School: Ryerson University
• Department: Communication
• Course: CMN 279
• Professor: Abdolreza Roshandel

Document Summary

Principle #2: the cost of something is what you give up to get it. Opportunity cost: what you give up to obtain something: to become a doctor, you need to go to medical school. In addition, you are giving up other career paths: waiting in a long line for a free item costs your time (cid:862)there is (cid:374)o su(cid:272)h thi(cid:374)g as free lu(cid:374)(cid:272)h(cid:863) Principle #3: rational people think at the margin. Rational people: someone always try to do their best to achieve their objectives. I(cid:374) e(cid:272)o(cid:374)o(cid:373)i(cid:272)s, (cid:449)e usuall(cid:455) assu(cid:373)e that fir(cid:373)s" o(cid:271)je(cid:272)ti(cid:448)e is to (cid:373)a(cid:454)i(cid:373)ize its profit a(cid:374)d (cid:272)o(cid:374)su(cid:373)ers" objective is to achieve the highest level of satisfaction. Marginal changes: small incremental adjustments to an existing situation or plan. Rational people make decisions by comparing marginal benefits and marginal costs: suppose you have already eaten 3 tacos.