00:01
So chapter one, section one, problem one is essentially asking us to discuss the following economic ideas of rationality, responding to economic incentives, and the idea that optimal decisions are made at the margin.
00:16
And this is with respect to members of the general population who are active participants in the economy.
00:22
And so this first assumption is that people are rational.
00:25
Or, to put it more simply, use the facts and information that they're given to make the best information.
00:30
Decision that they currently can in the moment in order to achieve whatever their desired outcome may be.
00:37
The second assumption is that people respond to economic incentives.
00:42
And so an example of economic incentive is like a tax incentive, which is basically a tax break in order to encourage spending in certain areas...