Class Fifteen

*More on Broken Windows and why aren’t they “good” or stimulative?

Why destruction is not good: (yes, the reconstruction stimulates economy, but at what COST?)

i.                     I wouldn’t have bought the roof (ie. Consumers’ profit)

ii.                   Before storm-----I have & 1000/ I have roof        After------I have $0/ I have roof

          *FOCUS!!! Don’t follow the $, follow real resources; the world is just worse off.

          *Job creation today decreases the job may appear tomorrow.

iii.                  But…what if roofers were idle/unemployed/we’re in a recession？

Look at the resources!!! Even the resources are idle, it’s not free! There’s no such thing as Free Lunch!

*Cost is subjective (appetite)

Paying attention to class makes you not know what will if feel to think about nap so you do not know what you are giving up. So the cost here is how much you VALUE the class.

*Marginal Thinking

Eg. Water-Diamonds paradox:

Something really high in use has a very low value.

Eg. The Airline ticket choice (marginal analysis)

Marginal cost: the change in my cost from taking my action.

Marginal profit: the benefit from taking action.