ECO 1002 Lecture 1: ECO Chapter 1.2
Document Summary
Minimize opportunity cost by selecting the option that has the largest benefit. Go to whichever you enjoy more, the pool or mall. If we think about opportunity costs (which are often hard to express in money), we see that things that appear to be free usually are not: marginal thinking. Economists say that optimal decisions are made at the margin . Evaluate whether the benefit of one more unit of something is greater than the cost. Examples: one more slice of pizza, one more hour of activity (studying, sleeping) A small additional amount of carpet is cleaned. Do the additional action (move furniture) only if the marginal benefits are greater than the marginal costs. Depends on your valuation of the clean room and the time and effort it takes you to move the furniture. Let"s examine a college education using opportunity costs and marginal thinking. We often hear people (especially politicians!) say phrases like the following: