Microeconomics: Behavioral Economics

Behavioral Economics
Links decisions between businesses and individuals
Rational Choice
Increases likelihood we get what we want
Heuristics
shortcuts to certain tasks
Brain Problems
Myopia, time, self-control
Myopia
Difficulty in understanding what to do today to achieve something in the future
Explicit Cost
“Accounting Costs,” obvious, cash and non-cash
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Implicit Cost
“Opportunity Costs,” Not noticed
Crowding Out Effect
Keep adding people to the payroll and eventually the workplace becomes too crowded to be proficient
Minimum Efficiency Scale
What do I have to make to achieve the lowest cost of production