CAS EC 101 Lecture 2: What is Economics Lecture 2 Manove.docx

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Michael Manove

Document Summary

Last time, we covered four useful principles of economic thinking: 1. Think about the goods (not the money): 2. When deciding how many, think at the margin. Now we will add three more principles: people respond to incentives sometimes in unexpected ways. This law would make it more difficult to collect rent from the elderly . So landlords would have an incentive not to rent to them. Ex: protecting trees: suppose the u. s. congress passes a tough law that limits the use of paper, what would happen to the number of trees, suppose congress made it illegal to eat chicken or eggs. Farmers would have a strong incentive to get out of the chicken business. All chickens are farmed there are no wild chickens. Should universities be free: we will discuss the cost of attending university later in the course. Taxes can be used for funding highway maintenance and law enforcement.