Question: One of the core principles I want students to take away from the class is what we've called the "economic decision-making rule" and informs our theory of individual behavior.
a. Write what the economic decision-making rule is and define marginal analysis.
b. Define sunk costs and opportunity costs and discuss which of the two should be included when engaging in marginal analysis.
c. Explain three contexts where we have seen the economic-decision make rule, interpret it in these contexts, and explain how they inform optimal decision-making (for example, a perfectly competitive firm sets P = MC to maximize profits, which is an application of the economic decision-making rule).