Marginal Analysis, Roller Coasters, Elasticity, and Van Gogh: Crash Course Economics #18
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- Опубліковано 10 лют 2025
- This week Jacob and Adriene teach you about marginal analysis, which you're using RIGHT NOW! The video is coming from inside the house! Or something. You'll learn how marginal analysis guides the decision making if cities, nations, companies, and amusement park enthusiasts. We'll also look at the idea of elasticity, and what people are willing to pay for certain stuff based on the supply. Why is a Van Gogh worth more than an OBEY poster? (hint: it's because they're still cranking out the OBEY posters, and Vincent is dead) All this and more on Crash Course Economics!
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Some notes for y'all:
Micro-economics looks at individual markets and the decision-making of consumers and businesses.
Micro-economics asks questions such as "should we increase minimum wage?" or "how many workers should we hire?".
Important aspect of Micro-economics: marginal utility
- Marginal utility is an analysis of how businesses and consumers make decisions.
Marginal is similar to "additional". Marginal costs = additional costs. Marginal benefits = additional benefits.
Businesses use marginal utility when considering employment. They compare the marginal costs of hiring the worker with the benefits. If hiring the worker results in more revenue (profit) then they are employed. +$ > -$ = More revenue +$ < -$ = Loss
- Utility means satisfaction or how much happiness is generated when humans consume goods or services
- The Law of Diminishing Marginal Utility means that as you consume more of a good or service, the utility, or satisfaction is lowered each time.
The Law of Diminishing Marginal Utility can be reworded as "The Law of Decreasing Additional Satisfaction".
- Utils are units to quantify satisfaction. They are completely subjective, meaning that they are based/influenced on people's opinions.
People use Marginal Analysis unconsciously every day.
Demand curve sloping downwards can represent marginal benefits. Supply curve sloping upwards is marginal costs. The Equilibrium is efficient because the benefits of the goods consumed are equal to the costs. This is how markets are so good at managing scarce resources.
- The Law of Supply is when an increase in price gives producers an incentive to produce more.
- Substitution Effect is that as prices rise, consumers will replace more expensive goods with alternate, similar, cheaper ones.
Diamond Water Paradox: Water's utility is VERY HIGH, crucial for life. But since it is plentiful to most people, the marginal utility is really low. Since we don't get much additional satisfaction from water, prices stay low. Diamonds on the other hand, the additional satisfaction, or marginal utility is VERY HIGH, due to its "scarcity" or the fact that diamond mining is run by monopolies.
Relative Scarcity generally means that the more rare an item is, the higher the price. This doesn’t apply for everything though. Utility is Subjective. Demand is dependent on peoples preferences.
Elasticity shows how sensitive quantity is to a change in price. Things that people need with little substitutes usually mean that if prices rise, people will not buy that much less of the good. Examples of goods that have a relatively inelastic demand include healthcare, coffee and fuel.
Elasticity of demand means that goods with lots of substitutes will only be chosen if their prices are lower than their substitutes.
There is also Elasticity of Supply. Inelasticity means that even if prices rise, the supply of goods will not change. Relatively elastic supply is when quantity is sensitive to price change because producers can respond quickly.
Marginal analysis reminds me a lot of how much of a difference it makes when you spend additional time on a task (e.g. perfecting an essay). The first few hours or planning, writing, reviewing and editing are highly productive. Then, each additional hour you spend will result in a relatively smaller improvement, until spending more time on it is no longer worth it.
I’ve been struggling to understand elasticity for the whole time of getting my degree and you explained it so easy in 12 minutes
Feel like going to my Uni accountant and demanding my money back tf
Yes. The additional benefits of watching this video was definitely greater than the additional cost 👏🏾👏🏾👏🏾👏🏾👏🏾👏🏾
*Stan*: How much does it cost to ride the rollercoaster?
*Employee*: Less!
*Stan*: _Is confused_
"diamonds are scarce" *south african mafia laughing secretely*
Marginal Analysis , Law of diminishing marginal utility , Utils - Discount deals , Law of supply , Diamond water paradox , Relative scarsity , Substitution effect , Elasticity of demand , Relativly inelastic .
finally gets onto microeconomics when my microeconomics class has already been finished
"No substitute for coffee"
TEA, YOU UNCULTURED HEATHENS
JK I love this channel
Writban Alim there is no substitute for coffee! period
CULTURE THYSELF YE HERETIC
Ah... I see you are man of culture as well
Nope. England messed that up a long time ago.
Thanks CrashCourse for the 55 Utils + the knowledge value I just got for free. I can’t donate currently but I’ll help spread the word as much as I can. I admire this channel a lot and it represents a significant revolution in education.
I'm full of utils.
Thanks, Crash Course.
+Ben Aaron You're full of Utils because the cost of the course was very very low. The only opportunity costs were the computer and the internet and your time.
David Williams - that makes sense.
Oodles of utils
"Diamonds are intrinsically worthless..." - De Beers chairman Nicky Oppenheimer, 1999
9:38 " I don't really need pizza." Speak for yourself.
+killerfrenchy I may have voiced the exact same phrase in my head.
+killerfrenchy I can substitute pizza pretty easily with a pizza burrito (calzone), or a pizza cake (lasagna).
+killerfrenchy Ha. Yes. Amen!
That's literally what the word 'I' is used for, she was speaking for herself.
I feel bonded because "5 cups of coffee in the morning", so.... I'll defend her :-|
thank a lot miss Adrien and Mr Gakob and all of the people who let crash course exist
Thank you SO must Crash Course for this UA-cam channel you creative, also a big thanks to ALL the people who are involved with the making of these awesome, educational ,and very helpful videos! I appreciate, and I am so very thankful! Thanks guys! 😁
One of the most useful lecture learned for me today. It helps solve a lot of my questions. Thank you crash course.
"What if I see something that would give me a lot of utils and I take it?"
"That's illegal"
"You don't understand it'll give more utils than it would give to them"
"Still illegal"
The inelastic demand of products, like pharmaceuticals, is a big reason why the free market needs some regulation.
Or, alternatively, the government can provide those products as well (e.g. universal healthcare).
Or maybe less regulation. In a free market, if a medicine's price is high, other pharmaceutical companies have incentives to create the same pharmaceuticals at a lower price.
Explanations as simple as "For economists the word marginal is pretty the same as additional", helped me as an ESL to understand more than what I tried to learn/ search for in the past 10 weeks... Thanks crash course! 😂
If the gas is too high, buy ethanol, if ethanol is high buy gas. Such is life in Brazil.
exactly !
+Ramon Denner Most people's cars in the USA still can't use Ethanol. Also, in the states E85 isn't cheap enough for it to be worth it yet.
Mathew Fitchett here all the cars are flex. They can use gas, ethanol or a mix of both.
Our biofuel is made of sugar cane, because of that its very cheap. I heard that you biofuel is made of corn, is that right?
+Ramon Denner That is correct.
***** its kinda similar to here, i think we only use sugar because we have more sugar croops than corn. Im not sure if its good choise or not.
Diamonds are expensive due to monopolies & marketing campaigns.
TheDajamster and cause of the high demand
@@diyanshu5573 The marketing campaigns created greater demand
The diamond example could lead really well into a crossover with psychology, considering that supply is (for the most part) kept artificially low by DeBeers while advertising is done to make people think the marginal utility of diamonds is really high, so that in effect they can sell diamonds in that system at very high prices.
There's no substitute for Crash Course. Thank you so much!
Amazing job guys! Really loving this series!
I have oodles of utils from watching these videos. Super helpful! Thanks guys.
This is Rehan.
I ve just watched your video.
I came across very very best n elaborative way of describing the microeconomics basic principles in easy n polite way.
Thanks again
At 3:16, the Latin motto around the roller coaster means "Don't forget to be awesome"
I love that law of diminishing marginal utility. All he had to say was how this is why markets are so efficient. I love efficiency and hate waste.
man I love crashcourse. I watch them to learn random stuff about the economy and astronomy on the weekends & at school where John Green saves my gpa in AP world. ❤️❤️❤️
Jacob talks so fast I can't wrap my brain around the concepts quickly enough😂
Have to say, on the first video of this series I wasn't impressed. Thankfully, I feel like it has both grew on me and the overall quality has improved with each episode. Well done Adriene and Jacob, keep it up.
As someone about to write a test on this content, I found this video extremely useful. Thank you!
I found this video more educating than all the previous ones. Maybe because I enjoyed this one so much? It was so interesting!
Geologists and industrial chemists they are not. The notion that a diamond is rare or difficult to produce is a falsehood. Apart from that, I still applaud this series. Greatly enjoy all of the episodes.
we are doing exams on Monday... the video came just in the right time...👍👍thanks crash course.. and also ACDC Enon.. you are the best in every video
7:00
Not to mention the fact that the diamond supply is being artificially restricted by companies. Diamonds aren't rare jewels, they're actually kind of common. Companies just make it really hard to get them.
8:49
Vegetable oil will work just fine with very little damage to your engine, but you'd have to be really desperate.
This video confirmed the earlier noted point that economics are indeed part of the study of human nature.
Gas stations used to have sales. "Gas wars," where stations on opposite corners would compete by lowering prices all day long, were common in Los Angeles.
There aren't relatively few diamonds, the DeBeers company hordes Diamonds to decrease supply and drive up demand. This is well known and if the video addressed this it could have further proved its point vis-a-vis supply/demand/marginal utility etc, It's a great video though, thanks!
I like the addition of Spock and Captain Kirk at the amusement park... Great creativity!
Love the John Green wearing Holden's cap in 4:18
Here are some notes if you need em!
-Microeconomics looks at individual markets and the decision making of consumers, businesses, and markets
-Marginal Analysis = an analysis of how individuals, businesses, and government make decisions (in economics marginal = ~ additional) → additional benefits and additional costs
-Businesses determine the additional revenue the worker would bring in contrast to the additional cost of bringing in the worker → if marginal revenue is higher than marginal cost, then the worker is needed
-Law of diminishing marginal utility (utility = satisfaction or happiness consumers get from a good or service) → reward to Law of Decreasing Additional Satisfaction (economist made up a term called “utils” which are like subjective happiness points)
-Demand curve on the supply & demand curve is actually the Marginal Benefit Curve while Supply curves are Marginal Cost Curves
-Then a terrible Diamond example that refuses to acknowledge the De Beers Scam
-Demand depends on the preferences and choices of consumers, but also on the number of substitutes
-Substitution effect = as prices rise, consumers will replace more expensive items with less costly alternatives
-Elasticity = shows how sensitive quantity is to a change in price
-Elasticity of demand = how readily people are ready to jump ship to another substitute good when the price is too high → demand for gasoline (as it has no alternatives in the short run for petrol car owners) is relatively inelastic = meaning a large percent change in the price leads to a small percent change in the quantity demanded (steeper demand curve)
-Perfectly inelastic goods (like Insulin) are goods in which a percentage change in price leads to not change in quantity demanded
-Elasticity in supply = relatively elastic supply is things like t-shirts in which quantity produced is sensitive to change in price because producers can respond quickly
-Perfectly inelastic supply can be used to describe expensive paintings like the Van Gogh, because even if the price goes up, Van Gogh is not going to be doing any more paintings
Diamonds actually rain down from the sky, but when you place an umbrella so wide and funnel it to a single house - now you have scarcity.
diamonds are artificially scarce
that doesn't make any sense. Diamonds could only be produced under very specific conditions, so their scarcity is not at only related to the mining process
Look up debeers
If I remember the topic correctly, several of the largest producers of diamonds purposefully bribes diamond-rich countries (such as Russia) to not extract the diamonds, and tries to prevent development and devalue the percieved utility of artificial diamonds.
Diamond companies reduce the supply of diamonds to jack up their prices.
nickwoo2 h
This one video pretty much sums up the last 3 months in my Economics 101 class. Touche Crash Course touche. . .
Small tip for students who are watching these videos, slow down the video speed under the you tube settings to 0.75...the information gets processed a lot better cause they are talking a bit fast....Thanks for the video though :)
BELIEF is also a factor in the value of items. Many people pay more for something like a car not because of it's practical use but because they believe it is worth more.
Asking whether macro or microeconomics is more important is like asking whether the individual or the society is more important. It depends on who you ask
What great timing. I'm studying for this exam right now.
Van Gogh won't make more paintings but people who have a Van Gogh that they're not selling, might be willing to sell it when the price goes up, so the price isn't completely inelastic.
Quite refreshing for the micro exam I have next week
I love the tiny John&Sherlock in the thought bubbles btw:3
Too bad they have got no line.
Nice, they have slowed down their pace.
THIS GUY IS ROCKIN A ACDC BELT.
too cool.
4:48 Damn, haven't seen this since ep 1
Awesome, I loved the way Adriene carried the lesson into the credits and the pitch for Patreon. Very well done!
Regarding employment, this is exactly why I'm against any sort of government regulation or additional taxation on businesses. More red tape means more cost to the business, more cost to hire additional employees, and higher prices for consumers. The more you restrict businesses, the more you restrict employment.
What should we do when the costs=benefits?
A very good, neutral episode. Facts of economics, not personal theories.
Adrian Hill oh my goodness! I'm a Marketplace listener and I had no idea she did this!!!!!!
Interestingly, in Mexico, the cost of electricity goes up the more you use it to encourage people to limit their use of electricity.
4:35 the sarcasm
I like the Spock and Kirk characters at 3:31
That cut tho at 4:35
Still waiting for them to talk about Jacobs ACDC belt. This is the most anticipated mystery of all entertainment
fact : diamonds are NOT scarce, their plentifull, The de Beers mining company however has a Monopoly on Diamond mines, only selling about three % of their income in diamonds each year artificialy inflating The price of diamonds
overlord2304 so, to consumers, they are scarce, as in that there is not a lot of them availabe to them. The point was not necessarily that they are inherently scarce.
diamonds are not scarce. it is an artificially scarce good. Tons(in weight) of diamonds are being used yearly for drilling and cutting machines almost at the same price like water :)
Where is crash course econ lesson 19? Please keep making these videos, they're really great!
I had my microecon final yesterday. This video came out one day late :(
The price of diamonds price is kept artificially high! The diamond market is being control unfair, like most markets!
Another example of something with a really elastic supply: Computer software. Once written, it costs next to nothing to make another copy.
I get a lot of utils out of crash course! 😄❤️
Can you guys go deeper into microeconomics like elasticity, supply and demand, cost of demand, etc. with their own personal videos plz
+Sean Orellana you can find it on khan academy
The demand for diamonds was created through an ad campaign and the price is maintained by an artificial shortage.
Aluminium in the past, was what the king tools were made on... since it was much rarer than gold.
Best example.
That's why I use aluminum accessories and cutlery and feel like a king.
Diamonds are not scarce. They are controlled by the DeBeers company, which artificially inflates the cost.
Thanks for enriching my knowledge of Economy.
Ooooof course you start covering this as my micro final is on Tuesday
Thumbs up for AC/DC buckle belt!!!
Diamonds are only expensive due to a monopoly.
I am hoping they'll make also Crash Course ACCOUNTING. I'm begging you please! 😖
You know, once I got over the lack of John or Hank in these videos, I realized they're actually quite good. Also, are Kirk and Spock in every thought bubble?
Most awesome in series.
I obtained a lot utils from this course because the cost for me was very low. For me it only required the opportunity costs purchasing a computer, the internet and using my time. But the course is not free, because there is no such thing as a free lunch. It wasn't free for you to make it and it wasn't free for me to watch it. It was just without price.
The term Utils is good, I would connect it with a "health index" which defines its true value
8:50- you CAN power most newer cars with alcohol Or ethanol.
woo love you guys , thank you for these videos, about to start my B.S. online in Econ at Penn State (serving abroad)
6:50 no most government water is a regulated maonolpoly to make sure companies cant price gouge. this mean that the price of water is artistically kept low
definitely a nice condensed review before my final tomorrow!!
7:02: Diamonds are certainly rare relative to water, at least in the west, and are dangerous to mine, but the prices are inflated because DeBeers has a global monopoly on diamond mining.
Crash Course Microeconomics: Diminishing marginal utility - the concept whereby the cost to build an additional resource (e.g. a park) remains the same, while it's benefit reduces with each instance if that resource (e.g. the first park in a city massively increases population happiness far more than the 53rd park).
Me: Oh! DimRes, like in World of Warcraft - diminishing returns, where if you keep spamming glyphed faerie fire against the same target, the same silencing effect gets less and less efficient until it does basically nothing?
Crash Course Microeconomics: I mean, I guess. You massive nerd.
Yes yes, I'm aware CC would never use "you massive nerd" in an even remotely derisive manner. I just really love that my years of gaming are currently really helping me in my management accounting certificate. It makes me a specific kind of happy!
well done guys! i like the way you provide the course. Please add more diagrams. Thank you!
Love the belt buckle
This video was worth 100 utils. Thank you.
Nice refresh.
Actually, gas stations do have sales, at least where I live. Sometimes a gas station will have really low prices compared to all the other stations around. They'll have cars lining up and waiting for hours to get cheap gas.
It’s the ac dc belt for me
Lots and lots of utils. Good work!
Just to clarify, I believe the video says that diamonds are rare because of the difficulty in extracting them from the Earth in diamond mines. There are a lot of commenters trying to clear up that diamonds are not rare, which is true. However, the video never states that diamonds are rare on the Earth, but that they are rare in the markets.
wow- do u guys read off the script?! SO good (thumbs up)