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

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