ECN 340 Lecture Notes - Lecture 2: Social Cost, Human Behaviour, Marginal Cost
1 Feb 2017
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Enc week 2 cost of human behaviour. Anything worth doing may not be worth doing well. People do things less well because of the added (marginal) cost. Writing a c paper is less costly than writing an a paper. Values of professor and student are different. Young"s opportunity cost lower: young"s benefits larger, gains for longer period of time, generally make less money when younger. Most people enjoy a beautiful lawn, so why do people walk on it: grass may be a short cut, thus bringing benefits, marginal cost is close to zero if the path is already there. Polluting may be rational if others behaviours cannot be controlled escalation can occur. In all these cases the individual thinks about the potential costs and benefits to himself/herself and acts accordingly. No one in a position to take charge and coordinate. Cost and benefits of driving includes probability of getting into an accident.
