Think Like An Economist S E4: Core Principle 3 - The Marginal Principle - Just One More?
18 snips
Aug 18, 2020 AI Snips
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Marginal Principle in Action
- Break down "how many" questions into smaller, marginal decisions.
- This simplifies complex decisions like hiring, pricing, or expansion.
Marginal Benefit vs. Cost
- Evaluate marginal benefit and cost for incremental decisions.
- Hire if marginal benefit (extra revenue) exceeds marginal cost (wage).
Samir's Coffee Shop
- Samir, a coffee shop owner, assesses each worker's revenue contribution.
- The first worker brings in $600, the second $300, and the third $100.