Today we talked about the axiom of scarcity and how people make choices.
We talked about how people are forced to make tradeoffs by scarcity and how these choices show our values. We talked about equity vs efficiency. Equity is making things more equal for everyone, like taxing people that do the same work, and efficiency is defined economically as producing things that people want at a low cost.
A cost is anything that consumes resources.
We then talked about opportunity costs and an in depth discussion on an example involving Bruce Springsteen tickets. Opportunity costs are what you must give up to get things - the net value of the next best option. (Benefits - costs). In class we talked about a free Bruce ticket vs a Barry Manilow ticket that I value at $50 but I can buy for $40. If I valued Bruce for nothing, the opportunity cost of seeing Bruce is $10 (the saved $10 of seeing Barry).
However, everybody values Bruce! So what is the minimum that I have to value Bruce at to see him? Well if I valued Bruce at $11 then I am saving $11 over the $10 of Barry so I should go to Bruce. But I could also value Bruce at $1 million and then I would definitely go to Bruce. I may or may not value Bruce more (I do.) But the value of Bruce must be at least $11.
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