Economics

Question 1

80/20

Answer 1

80% of outcome from 20% of effort

Question 2

Marginal utility

Answer 2

Decreasing with increasing consumption, diminishing returns

Question 3

Agency costs

Answer 3

Misaligned incentives bias (risk/reward)

Question 4

Sunk cost

Answer 4

Move on, business that sunk is at advantage to compete if breaks even

Question 5

Expected value

Answer 5

Size of the prize

Question 6

Complements and substitutes

Answer 6

Which is what for us?

Question 7

Absolute and relative advantages

Answer 7

Benefits of specialisation

Question 8

Tragedy of commons

Answer 8

Individuals acting for their own beliefs and counter to the common good of all users

Question 9

Prisoners dilemma

Answer 9

Prisoners self interest goes against value maximisation for a group of them

Question 10

Red queen effect

Answer 10

Constant evolution needed to survive, otherwise you just ran on the same spot (FCA confessions of a capital junkie)

Question 11

Constraints

Answer 11

Bottlenecks

Question 12

Theory of chaos

Answer 12

Tipping point, non-linearity, exponentiality

Question 13

Alternative costs

Answer 13

Best alternative and costs of alternatives

Question 14

Equilibrium

Answer 14

Static vs dynamic

Question 15

Invisible hand and foot

Answer 15

Market forces and silent voting

Question 16

Game theory

Answer 16

What maximises common outcome and how will players act?

Question 17

Cumulative advantage effect (akin to compounding)

Answer 17

• rich get richer

- one small advantage of identified and used leads to massive outperformance

Question 18

Power law / concentration rule

Answer 18

• top 1% of live artists generate 60% of total revenue

- you don’t need to cover everything but key points