ECON-2006EG Study Guide - Quiz Guide: Marginalism, Marginal Cost
7 Mar 2021
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Chapter outline: optimization: choosing the best feasible option, optimization application: renting the optimal apartment, optimization using marginal analysis. Behavioral economics jointly analyzes the economic and psychological factors that explain human behavior. So, it explains why people optimize in some situations and fail to optimize in others. To calculate an example for optimizing we try to find the optimum apartment where we first focusing on the costs. We are assuming that the benefits, like view, size are the same because if the benefits are the same, then cost-benefit analysis becomes simpler. In the first example the commuting costs are calculated with opportunity costs of /hour and we can see that in this case the apartment far" is the optimum because it has the lowest total costs. In the second example the commuting costs are calculated with opportunity costs of /hour and we can see that now the apartment close" is the optimum because it has the lowest total costs.
