ECON 103 Lecture Notes - Lecture 3: Advance Healthcare Directive, Life Insurance
30 Jan 2018
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Substitution: the second economic principle in economics is substitution, another way of stating the principle of substitution is: Again, like maximization, this assumption is universal it applies to all things we value: example of substitution are everywhere. I drive this: i buy my clothes here, i teach here, i"m not the only one who substitutes. I would tell my kids if they didn"t eat this: other examples, there may be social sanctions to substituting: Promise parents to study and live off campus. Set your alarm on other side of room: objections to the principle of substitution, not everyone is willing to make the same trade off. We don"t even assume your willingness to substitute (trade) must be constant over time: no one will substitute a necessity. Have you ever smoked, driven too fast, taken an unsafe short cut, eaten fast food, engaged in unsafe sports, etc. Living wills forgo excessive medical treatment for lower insurance premiums.
