Are we to conclude from this first assumption that this household is a cost-minimizing economic unit?
I am currently having my kitchen floor re-tiled. Paul Davis, my contractor, pointed out that, while the tile I chose was “greener” than the others, it would cost more to lay because it required specially-certified laborers. I pointed out that the price would come down, eventually, when more households elected to lay the “greener” tile than the more common, and more carbon-inefficient, tiles.
First, was I correct? And, second, can R Lucas’ model accommodate households such as mine that make a broad range of decisions based on value sets that are not economic?