Week 1

Question 1

What is economics the study of?

Answer 1

Incentives

Question 2

Three main questions asked when people make a bad decision?

Answer 2

1. Who is making the bad decision
2. Do they have enough information to make a good decision
3. Do they have the incentive to make a good decision?

Question 3

What is the art of business?

Answer 3

Identifying assets in low- valued uses and devising ways to profitable move them to higher-valued uses

Question 4

Rational Actor Paradigm

Answer 4

States people act rationally, optimally and self-interestedly

Question 5

Using the RAP what are the two reasons mistakes may be made?

Answer 5

1. Lack of information
2. Bad incentives