Costs vs. Benefits

This is one of the most fundamental principles of economics that we all use but often without using a systematic ways to analyze it.  One key thing to learn is marginal cost vs. marginal benefits.  Understanding the concept of “marginal” vs “total” can really help one avoid costly mistakes of sinking more resources into unworthwhile pursuits, not getting the best returns on investment, etc.

 

Resources:

     – Monopoly actually teaches a lot about marginal cost vs. marginal benefits.  Do the math and you’ll see why you should always build three houses instead of a hotel, etc.  And why a set of streets on each side is better than the other set.