“There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa.”― Frédéric Bastiat, French Economist (1801-1850)

a. In your own words, fully explain his main idea. Be sure to use the words “incentives” and “opportunity cost” in your answer

b. In an effort to get students to come to class on time, assume that your instructor establishes a policy where 20 points are deducted from your grade if you show up to class more than 10 minutes late. Explain two different unforeseen effects that could cause this policy to backfire and actually encourage students to come late or ditch class.

c. Think of a well-intentioned policy that on the surface appears to help people but in reality would likely create incentives that end up hurting people. Identify the policy and explain why it would be “disastrous”.

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