Marginal Analysis, Roller Coasters, Elasticity, and Van Gogh: Crash Course Economics #18

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  • Опубліковано 22 лис 2024

КОМЕНТАРІ • 538

  • @lulupipe9095
    @lulupipe9095 7 років тому +179

    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.

  • @chillsahoy2640
    @chillsahoy2640 9 років тому +91

    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.

  • @Angie_suv
    @Angie_suv 5 років тому +40

    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

  • @andreciagl
    @andreciagl 4 роки тому +6

    Yes. The additional benefits of watching this video was definitely greater than the additional cost 👏🏾👏🏾👏🏾👏🏾👏🏾👏🏾

  • @ray1983able
    @ray1983able 5 років тому +1

    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 .

  • @martinharris4416
    @martinharris4416 6 років тому +107

    "diamonds are scarce" *south african mafia laughing secretely*

  • @benaaronmusic
    @benaaronmusic 9 років тому +156

    I'm full of utils.
    Thanks, Crash Course.

    • @DavidWilliamsaz
      @DavidWilliamsaz 8 років тому +12

      +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.

    • @benaaronmusic
      @benaaronmusic 8 років тому +7

      David Williams - that makes sense.

    • @michaelbarron6073
      @michaelbarron6073 7 років тому +4

      Oodles of utils

  • @MrJord274
    @MrJord274 9 років тому +60

    finally gets onto microeconomics when my microeconomics class has already been finished

  • @YellowToomNook
    @YellowToomNook 9 років тому +86

    *Stan*: How much does it cost to ride the rollercoaster?
    *Employee*: Less!
    *Stan*: _Is confused_

  • @CarlyleA999
    @CarlyleA999 8 років тому +49

    The inelastic demand of products, like pharmaceuticals, is a big reason why the free market needs some regulation.

    • @saeedbaig4249
      @saeedbaig4249 8 років тому +9

      Or, alternatively, the government can provide those products as well (e.g. universal healthcare).

    • @Ryosuke1208
      @Ryosuke1208 6 років тому +5

      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.

  • @MacroAggressor
    @MacroAggressor 8 років тому +33

    "Diamonds are intrinsically worthless..." - De Beers chairman Nicky Oppenheimer, 1999

  • @talos1279
    @talos1279 5 років тому +6

    One of the most useful lecture learned for me today. It helps solve a lot of my questions. Thank you crash course.

  • @TheDajamster
    @TheDajamster 9 років тому +69

    Diamonds are expensive due to monopolies & marketing campaigns.

    • @diyanshu5573
      @diyanshu5573 5 років тому +2

      TheDajamster and cause of the high demand

    • @jishman101
      @jishman101 4 роки тому

      @@diyanshu5573 The marketing campaigns created greater demand

  • @antaresmaelstrom5365
    @antaresmaelstrom5365 9 років тому +11

    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.

  • @hishamanan938
    @hishamanan938 6 років тому +1

    thank a lot miss Adrien and Mr Gakob and all of the people who let crash course exist

  • @justgunnadance
    @justgunnadance 8 років тому +3

    I have oodles of utils from watching these videos. Super helpful! Thanks guys.

  • @juancpgo
    @juancpgo 8 років тому +6

    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.

  • @writbanalim2715
    @writbanalim2715 8 років тому +436

    "No substitute for coffee"
    TEA, YOU UNCULTURED HEATHENS

  • @MrRandomPianoPlayer
    @MrRandomPianoPlayer 9 років тому +7

    Amazing job guys! Really loving this series!

  • @101publicenemy
    @101publicenemy 9 років тому +5

    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!

  • @tanmaypalkar9861
    @tanmaypalkar9861 6 років тому +1

    There's no substitute for Crash Course. Thank you so much!

  • @WilliamTurnerMusic
    @WilliamTurnerMusic 9 років тому

    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.

  • @rehanjawaid
    @rehanjawaid 6 років тому

    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

  • @killerfrenchy
    @killerfrenchy 9 років тому +326

    9:38 " I don't really need pizza." Speak for yourself.

    • @samuelleatherwood9233
      @samuelleatherwood9233 9 років тому +4

      +killerfrenchy I may have voiced the exact same phrase in my head.

    • @drakeblood4
      @drakeblood4 9 років тому +10

      +killerfrenchy I can substitute pizza pretty easily with a pizza burrito (calzone), or a pizza cake (lasagna).

    • @emmakateunruh8503
      @emmakateunruh8503 8 років тому +2

      +killerfrenchy Ha. Yes. Amen!

    • @netajithevar296
      @netajithevar296 6 років тому +6

      That's literally what the word 'I' is used for, she was speaking for herself.

    • @danielsonski
      @danielsonski 6 років тому +1

      I feel bonded because "5 cups of coffee in the morning", so.... I'll defend her :-|

  • @stas4112
    @stas4112 7 років тому +1

    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

  • @rachelray7386
    @rachelray7386 8 років тому +5

    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! 😁

  • @ArjunTheCreator8
    @ArjunTheCreator8 Рік тому +1

    I found this video more educating than all the previous ones. Maybe because I enjoyed this one so much? It was so interesting!

  • @whirlmaster
    @whirlmaster 9 років тому

    Love the John Green wearing Holden's cap in 4:18

  • @johnc1014
    @johnc1014 8 років тому +1

    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.

  • @anesuchaminuka4574
    @anesuchaminuka4574 7 років тому

    As someone about to write a test on this content, I found this video extremely useful. Thank you!

  • @HeeminGamin
    @HeeminGamin 9 років тому +21

    "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"

  • @fredleckie5880
    @fredleckie5880 9 років тому +2

    At 3:16, the Latin motto around the roller coaster means "Don't forget to be awesome"

  • @nickwoo2
    @nickwoo2 9 років тому +96

    diamonds are artificially scarce

    • @LuisSierra42
      @LuisSierra42 6 років тому

      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

    • @TuomasKivisto
      @TuomasKivisto 6 років тому +8

      Look up debeers

    • @EpicScizor
      @EpicScizor 6 років тому +5

      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.

    • @CentauriGamerz
      @CentauriGamerz 6 років тому +4

      Diamond companies reduce the supply of diamonds to jack up their prices.

    • @shawnboire5400
      @shawnboire5400 6 років тому

      nickwoo2 h

  • @thelolminecrafter7830
    @thelolminecrafter7830 5 років тому +2

    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.

  • @WinBear
    @WinBear 9 років тому +8

    Awesome, I loved the way Adriene carried the lesson into the credits and the pitch for Patreon. Very well done!

  • @zombiemistress
    @zombiemistress 7 років тому +1

    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.

  • @ramondenner5126
    @ramondenner5126 9 років тому +81

    If the gas is too high, buy ethanol, if ethanol is high buy gas. Such is life in Brazil.

    • @miranda9691
      @miranda9691 9 років тому

      exactly !

    • @fitch03
      @fitch03 9 років тому +4

      +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.

    • @ramondenner5126
      @ramondenner5126 9 років тому +2

      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?

    • @JinwooYoon1217
      @JinwooYoon1217 9 років тому

      +Ramon Denner That is correct.

    • @ramondenner5126
      @ramondenner5126 9 років тому

      ***** 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.

  • @iamnotmaddie84
    @iamnotmaddie84 9 років тому

    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. ❤️❤️❤️

  • @olivejuice1985
    @olivejuice1985 7 років тому +1

    I love the tiny John&Sherlock in the thought bubbles btw:3
    Too bad they have got no line.

  • @catrionafung8442
    @catrionafung8442 7 років тому

    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! 😂

  • @paranjoykb
    @paranjoykb 9 років тому +2

    Nice, they have slowed down their pace.

  • @MeshFrequency
    @MeshFrequency 9 років тому +21

    Thumbs up for AC/DC buckle belt!!!

  • @pivotbroz
    @pivotbroz 9 років тому

    This one video pretty much sums up the last 3 months in my Economics 101 class. Touche Crash Course touche. . .

  • @alexanderschmidt8305
    @alexanderschmidt8305 9 років тому

    Quite refreshing for the micro exam I have next week

  • @habakkukmaheri1618
    @habakkukmaheri1618 9 років тому

    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

  • @MyplayLists4Y2Y
    @MyplayLists4Y2Y 9 років тому

    I like the Spock and Kirk characters at 3:31

  • @TallJustin1
    @TallJustin1 9 років тому

    What great timing. I'm studying for this exam right now.

  • @overlord2304
    @overlord2304 9 років тому +54

    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

    • @thomazo7179
      @thomazo7179 6 років тому +15

      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.

  • @olliesims957
    @olliesims957 9 років тому +4

    A very good, neutral episode. Facts of economics, not personal theories.

  • @revera89
    @revera89 4 роки тому +1

    This video confirmed the earlier noted point that economics are indeed part of the study of human nature.

  • @seandon3827
    @seandon3827 8 років тому +2

    Can you guys go deeper into microeconomics like elasticity, supply and demand, cost of demand, etc. with their own personal videos plz

    • @irabakri2662
      @irabakri2662 8 років тому

      +Sean Orellana you can find it on khan academy

  • @dr.labrat-x3z
    @dr.labrat-x3z 5 років тому

    The term Utils is good, I would connect it with a "health index" which defines its true value

  • @selfbane99
    @selfbane99 9 років тому +1

    THIS GUY IS ROCKIN A ACDC BELT.
    too cool.

  • @JinwooYoon1217
    @JinwooYoon1217 9 років тому +24

    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.

  • @kauancorte541
    @kauancorte541 8 років тому

    Thanks for enriching my knowledge of Economy.

  • @Grace-kp8fl
    @Grace-kp8fl 6 років тому

    Adrian Hill oh my goodness! I'm a Marketplace listener and I had no idea she did this!!!!!!

  • @GabeDubbs
    @GabeDubbs 9 років тому

    Love the belt buckle

  • @DaviddeKloet
    @DaviddeKloet 9 років тому +5

    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.

  • @GustavoSilva-ny8jc
    @GustavoSilva-ny8jc Рік тому +1

    4:48 Damn, haven't seen this since ep 1

  • @jojuna99
    @jojuna99 7 років тому +4

    Jacob talks so fast I can't wrap my brain around the concepts quickly enough😂

  • @ULTD8
    @ULTD8 8 років тому +3

    4:35 the sarcasm

  • @이주연-x4x
    @이주연-x4x 5 років тому +2

    What should we do when the costs=benefits?

  • @kamush4172
    @kamush4172 9 років тому

    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

  • @Chrissepisje
    @Chrissepisje 6 років тому

    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.

  • @MeanderingMeagan4
    @MeanderingMeagan4 9 років тому

    Ooooof course you start covering this as my micro final is on Tuesday

  • @augustopinochet6899
    @augustopinochet6899 8 років тому +19

    Diamonds are only expensive due to a monopoly.

  • @paulblanchard242
    @paulblanchard242 4 роки тому +2

    The price of diamonds price is kept artificially high! The diamond market is being control unfair, like most markets!

  • @whatIthinktoday
    @whatIthinktoday 9 років тому

    Where is crash course econ lesson 19? Please keep making these videos, they're really great!

  • @ericwhittaker3570
    @ericwhittaker3570 6 років тому +1

    I like the addition of Spock and Captain Kirk at the amusement park... Great creativity!

  • @andrewhughes3986
    @andrewhughes3986 5 років тому +1

    Still waiting for them to talk about Jacobs ACDC belt. This is the most anticipated mystery of all entertainment

  • @Visaals3
    @Visaals3 9 років тому +1

    I had my microecon final yesterday. This video came out one day late :(

  • @johnc1014
    @johnc1014 8 років тому

    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.

  • @Redagriff
    @Redagriff 9 років тому

    definitely a nice condensed review before my final tomorrow!!

  • @btchard7409
    @btchard7409 8 років тому +1

    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 :)

  • @ntuthukonzama9366
    @ntuthukonzama9366 7 років тому

    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 :)

  • @theeightbithero
    @theeightbithero 8 років тому

    8:50- you CAN power most newer cars with alcohol Or ethanol.

  • @Brickinasock
    @Brickinasock 7 років тому +1

    Nice belt buckle.

  • @kimberlydrennon4982
    @kimberlydrennon4982 9 років тому +1

    Interestingly, in Mexico, the cost of electricity goes up the more you use it to encourage people to limit their use of electricity.

  • @darkdragonsoul99
    @darkdragonsoul99 9 років тому +28

    diamonds aren't even that rare

  • @nurlansalam1702
    @nurlansalam1702 6 років тому

    well done guys! i like the way you provide the course. Please add more diagrams. Thank you!

  • @connormcnicol-day1533
    @connormcnicol-day1533 9 років тому

    Can you guys cover inputs and costs? Along with monopoly, oligopoly, monopolisitc competition and perfect competition? Your vids are really awesome and they're really helping me with my economics course.

  • @egonzalez4294
    @egonzalez4294 8 років тому

    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.

  • @tominalgl1308
    @tominalgl1308 7 років тому

    You should do a video about surplus-value

  • @vaibhavtripathi4951
    @vaibhavtripathi4951 6 років тому +1

    Most awesome in series.

  • @jerome1335
    @jerome1335 9 років тому +2

    That cut tho at 4:35

  • @legalliberal3413
    @legalliberal3413 9 років тому +1

    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?

  • @colsoncustoms8994
    @colsoncustoms8994 9 років тому +47

    What is this 'don't really need pizza' that you speak of?

    • @seandafny
      @seandafny 5 років тому

      “Everybody likes pizza.” -Michael Scott

  • @gb3eazy965
    @gb3eazy965 Місяць тому +1

    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.

  • @oykuaccan4482
    @oykuaccan4482 4 роки тому

    This video was worth 100 utils. Thank you.

  • @sallygray7473
    @sallygray7473 9 місяців тому +1

    It’s the ac dc belt for me

  • @RedLeader327
    @RedLeader327 9 років тому +1

    Diamonds are not scarce. They are controlled by the DeBeers company, which artificially inflates the cost.

  • @TaltsProductions
    @TaltsProductions 8 років тому +1

    woo love you guys , thank you for these videos, about to start my B.S. online in Econ at Penn State (serving abroad)

  • @reynantealvarez931
    @reynantealvarez931 7 років тому

    I am hoping they'll make also Crash Course ACCOUNTING. I'm begging you please! 😖

  • @vinderp9466
    @vinderp9466 9 років тому

    Nice belt, Jacob.

  • @justgoneflying
    @justgoneflying 9 років тому

    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.

  • @DavidFernandez-od4fz
    @DavidFernandez-od4fz 9 років тому

    Will you guys eventually make an (AP) Art History Crash Course series? It definitely seems like you guys could efficiently pull it off, plus it is a very complex and intriguing topic that needs the Crash Course treatment for a better understanding.

  • @CapyBrotha
    @CapyBrotha 9 років тому

    Nice refresh.

  • @DavidWilliamsaz
    @DavidWilliamsaz 8 років тому

    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.

  • @tranguyen6061
    @tranguyen6061 6 років тому

    This video is very useful for me. Thank CrashCourse ^^

  • @andreciagl
    @andreciagl 4 роки тому

    This stuff really helps. Thank you