Basic Economics Principles (October 3rd, 2011)

1. How they make decisions
2. How people interact
3. Aggregated

1.  People faces tradeoffs (RANISTAAFL) ; which means no free lunch.
• What is a cost? 
• - There is too much of a good thing
2. Opportunity costs
• Breaking windows
• No new jobs
• On net, there is no change
• Before and after
3. "Marginal" analysis
• Subjectivism
4. Sunk costs
5. People respond to incentives

Cost
-Anything that consumes resources
-Spend to much time to get an A in economics.
-How to make pie as big as possible or evenly divided?

Drug Lag
Longer it takes to get drugs out of there and more people are harmed.
Drug Loss
Research and development on drugs but we only get about 20 new ones per year - $1.5 billion dollars

-reverse incentives is the waiting to get things approved. taxes are not cost; tax cuts and raised taxes do not have a cost money to collect taxes. Opportunity costs has a net benefit of your next best opportunity.

You win Bruce tickets but you cannot resell them. Versus Barry Manilow tickets which cost 40 dollars but they are willingness to pay for 50 dollars. What is the cost of seeing the Bruce ticket?
It was net value of 50-40 which is equal to 10.

Broken window effect is the disasters of the stimulate economy. Why is this bad for the economy?
What would happen if there was no disasters? The benefits are deducted from the costs.