Core Princaples Flashcards
1
Q
What is the cost-benefit principle
A
It goes over that you should pursue a option if the benefits are equal or greater than the cost
2
Q
How do you apply the cost benefit princaple
A
- Evaluate all the options
- Recognize and take account economic surplus
- Avoid framing effects
3
Q
What is Opportunity cost
A
How worth is option 1 over alternative 1
4
Q
What is Marginal Analysis
A
When you consider the incremental changes of the costs and benefits
5
Q
What is the Rational Rule of Marginal Analysis
A
Go with the option until the benefit is equal to the cost or the benefit is larger
