Principle2: The Cost of Something Is What You Give Up to Get It

The opportunity cost of an item is what you give up to get that item.

Opportunity cost--Whatever must be given up to obtain some item.

Principle 3: Rational People Think at the Margin

Marginal change -- a small incremental adjustment to a plan of action.
Rational people systematically and purposefully do the best they can to achieve their objectives, given the available opportunities.
Rational people know that decisions in life are rarely black and white but usually involve shades of gray.
Rational people often make decisions by comparing marginal benefits and marginal costs.

Professor Guzhaoyang's 3 take aways : 1, average cost; 2, incremental cost; 3, you get what you measure.

Principle 4 : People Respond to Incentives