Thank you so so much for publishing this. I'm an adult student finishing my degree with an online university and I cannot, for the love of God, understand a single word of the crappy tutorials that my university provides. These videos not only make everything a lot easier to understand but it also makes it so much fun and engaging. Thank you MIT and thank you Professor Gruber.
Here's a Summary for y'all, the lecture is example heavy so there's not much to write **Budget Constraints** - MRT (Marginal Rate of Transformation): The Slope of the Budget Constraint - Opportunity Set: Set of choices available to you given your income & market prices - The Optimum (graphically) is the tangency between your indifference curves and budget constraints is the optimal constrained bundle. See Figure at 18:36 *try to understand why D is the optimal choice and the others aren’t. For example, Point C has a slope of 1/2. Which means you’ll not spend all your money. - The Fundemental Equation of Consumer Choice, MRS = -muC/muP=-pC/pP=MRT At the optimum, The Ratio of Marginal Utilities equals the Ratio of Prices. i.e. The rate of which you want to trade of Pizza for Cookies is the rate of which the market will allow you to trade off Pizza for Cookies. In other words, the ratio of the benefits equals the ratio of the cost. - Manipulating the equation above, muC/pC=muP/pP , which can be called the bang for buck equation i.e. your marginal happiness per dollar spent should be equal. One Sentence Summary, **Marginal Benefit (MRS) = Marginal Cost (MRT)**
A good idea would be to download the transcript, play the video at 1.75 speed and look at the transcript and the graphs (could been found in the handouts section). If you don't get something you could play the video at lower speed.
This is going hand-in-hand with my online microeconomics class. Thank you so much for posting these lectures, I wish I took this class in person, but this makes up for it!
Same. Really like these free lectures from MIT. Thankyou. They don't grant certification on MITopencourseware, but the free learning for anyone that wants to and get education from MIT is just fantastic.
40:00 i was getting really mad at Jon saying he was just doing positive economics when the choice of "shelter" as good B rather than "drugs" has obvious normative implications..... so i'm glad he addresses this, i should've had more faith in him :)
@@王士豪-l6c The derivative of a function (ax)^n is a*n*(ax)^(n-1) where a is a constant. The square root of PC is equivalent to saying (PC)^(1/2) or (PC)^0.5, so if you're deriving with respect to P, P is your x, C is a, and 0.5 is n, so the derivative would be C*0.5*(PC)^(0.5-1) or 0.5*C*(PC)^(-0.5). x^-n is equivalent to 1/(x^n), a negative power just means you move it to the denominator, so you get 0.5*C/(PC)^0.5, and again, x^0.5 is the same as square root of x, so finally you're left with 0.5*C/squareroot(PC). If you do it with respect to C, C is your x instead, you get 0.5*P/squareroot(PC). dU/dP means derivative of U w/ respect to P, dU/dC means derivative of U w/ respect to C.
Insightful and incredible lecture as a professional in my views.Liked the topic nd informative lecture nd important tips including formulas nd curve diagrams which makes the lecture simple.kindly elaborate how to uplift people who are below poverty line??. What steps are taken nd Strategies recommended? What about the Budget nd Budgetary control nd allocation to keep economy on right track? Useful nd inspiring important tips.Thanx sir.
In the post Covid days the budget constratint has its niche to identify the inflationary rate in case of buying the inventory in case of Economic quantity demanded with the revised assumptions. Hence,its most pivotal for the downward slope in the production curve of the industrial phenomenon. Hence,all the subsidirat affecting the quantity demanded will be the hardest portion which needs the utmost discussion often. Thus marginal replacement of goods may be a hugh value in case of diminishing of marginal returns in case of managers.
Here maybe he's talking about the attainable and non attainable combinations where initially the dots were up to previous budget line but now they are within new budget line(black ones) and the remaining between new and previous budget line (red) are not attainable.
anyone care to help me on 27:59 why MuP=dU/dP has a equation of 0.5xC?? where does the C comes from? I am totally fine with the derivative part, I know where the 0.5 comes from, but C?? why Mu of Pizza has anthing to do with cookies?
It is from derivation of the squareroot like the derivation of squareroot of xy is (1\2 times square root of xy )times the derivation of xy itself.....i am not sure if I explained it in understandable way but I suggest you to derivate the function by yourself first and crosscheck it
Excellent lecture, I'm finding this course very useful. However, I have a doubt about the last example, regarding the SNAP program and the effectiveness of so-defined "paternalism": Prof. Gruber said that, since giving poor people food stamps instead of cash made them buy 15% more food, that choice would not be that good because that constraint would make those people less happy, so it is better to just give cash and make them do the choice. But if, for example, the goal of the government was to fight malnutrition, wouldn't then be better to force poor people to consume that 15% more food? I feel like the topic was not treated deeply enough to cover these (in my opinion, relevant) cases
Am I just seeing things, or is this graph drawn wrong? The formulas written are “12P + 6C” and “18P + 6C” but to me, it looks like what’s being plotted is the inverse… 11:27
Because the price of one cookie is $6 and price of one pizza is $12. So you can trade 2 cookies for one slice of pizza (essentially one cookie for half slice of pizza)
What you described at the end really is the saying, you can’t make a poor man rich. The concept of wisdom over dolllars. Teach a man to fish type of thing. People who get money quick don’t know how to manage it unless they have earned the wisdom prior.
@@lucayan7982 not a quiz. Quiz sections are smaller class groups you attend, usually lead by a TA. So the students would be learning this on non-lecture days.
@@lucayan7982 "Quiz Section" is what we call the smaller breakout classes in large lecture classes at universities in the US. It doesn't have anything to do with quizzes or taking tests. Typically you attend lecture three times a week and attend quiz section twice a week. I was just explaining that the math-oriented parts of this class were likely all discussed in smaller groups with the teaching assistant and probably wont be on video. At least that's how it was when I was in school.
it might be arising out of the budgetary notion in case of planning or strategizing for the optimal output or utility in sense of personal micro Economics to derive the high value of constrained budget of the whole in case of the value generation of the industrial output.
In lesson 2 professor Gruber mentioned addictive behaviour, like smoking, can change your utility function over time. So I think an idealized perfectly rational agent should take this into account, but in practice doesn't look so simple. In these cases, are economists more amenable to some form of paternalism?
In case of the optimization of life's own temporal value,the most optimistic way in the risk dissoluted scenario of the macroeconomic behaviour,it's really the inverse utility of paternalism if we don't accept the indifference to the smoking habit,the utility of other habits like overeating or any kind of portion that affects the micro temporality creates a long difference in the human behaviour. In that context one indifference of temporality comes in my way of thought as the technical improvement in the world of cheap and sustainable technical imposition to increase the micro utility to support the entire product mix would be a great strategy concentric in case of the product generation.Hence a complete inversion of inverted utility to the actual utility function hence,the same is here the increase in marginal utility by relinquishing the smoking habit would be far more better replacement of everything having high utility function including a saviour in the irrational behaviour to the human being the high penetratiin of sustainability.
hey hey. Because government gave the poors the debit card which can be only used for food, the people cannot use this money for shelters. Therefore, people cannot spend any money to shelters and now it has restricted in that 5000
As someone who came from Architecture to economics, know things different. In architecture it's said - less s more In economics - more s better than less
What if I found a place that sold $5 cookies and not $6 so I could buy more for less? How would this effect the equation after the fact? I see how it’d stay if the $5 cookie was the original price but let’s say it’s not..? That or like.. what if there’s a sale?
Can a person compare more than two variable at a time? Is his focus of attention not limited to two things? What's the point of creating three dimensional plane that represents some models of economics?
I don’t understand 16:00 the question : Changing slope does not affect if one buy more cookies than pizza and overall decrease in income affect all. Please help me thanks
Your question is hard to understand, but I can explain that because the slope is the ratio of the quantity of cookies to pizza, changing the slope means you change the quantity of cookies or pizza or both (see algebra)
he is saying that the budget changes (since your disposable income decreases) but the proportion of trade-off between two products remains (since the price of each type remains and the value of each type for you is the same. i.e. the marginal substitution for you is the same). you see the parallel shift of the budget lines but the slope remains.
From the syllabus, "There are no prerequisites for this course, although some calculus at the level of 18.01 Single Variable Calculus will be used. " See the course on MIT OpenCourseWare for more info and materials at: ocw.mit.edu/14-01F18. Best wishes on your studies!
Shouldn't the decrease in budget constraint (imposed by parents) lead the students to opt the cookies more because they are cheaper and hence the slope of curve to change (increase -vely) thus creating a fractional MRT?
MRT is the ratio of market prices of two goods. It is independent of your income or budget constraints. The decrease in income will in some combination lower both the amount of cookies and the amount of pizza. However, the exact combination by which pizza slices and cookies get lowered depend upon your utility function which ultimately makes your indifference curve.
If you were that high school student, we would tell you to ignore the budget constraints and recommended you apply anyways. 🙂 MIT is need-blind and full-need. If you were accepted, MIT would make sure you could afford MIT tuition... even if they had to fully cover it. Visit sfs.mit.edu/undergraduate-students/the-cost-of-attendance/making-mit-affordable/ for more info.
@@mitocw QUESTION: minute 28.48 > " you're willing to give up 2.5 p for 1 c" is incorrect right? Looking at the graph (minute 29.18) the indifference curve looks like that you're willing to give up 2.5 p for 2 c as the interval on the x axis is not 1 but 2. Can someone either tell me that I am right, but more likely explain why I am wrong?
The derivative of a function (ax)^n is a*n*(ax)^(n-1) where a is a constant. The square root of PC is equivalent to saying (PC)^(1/2) or (PC)^0.5, so if you're deriving with respect to P, P is your x, C is a, and 0.5 is n, so the derivative would be C*0.5*(PC)^(0.5-1) or 0.5*C*(PC)^(-0.5). x^-n is equivalent to 1/(x^n), a negative power just means you move it to the denominator, so you get 0.5*C/(PC)^0.5, and again, x^0.5 is the same as square root of x, so finally you're left with 0.5*C/squareroot(PC). If you do it with respect to C, C is your x instead, you get 0.5*P/squareroot(PC). dU/dP means derivative of U w/ respect to P, dU/dC means derivative of U w/ respect to C.
marginal utility of one unit of product A divided by that of product B. this indicating the marginal substitution between these two products to remain the same level of utility.
One point I wanna make to the "food/shelter" case, if most people living below the poverty line do prefer shelter, it is better to not give them cash but other life essentials. Because if everybody spend more money on shelter, they would just drive up the low-end housing price. Because they are the target group of that market anyways, so if all of them are capable of/willing to pay more money, the competition'd make price goes up and money goes to the landlords.
These equation is quite tricky to make the indifference in the buying behaviour of the product in case of obtaining diligence of his entire family. It seems the Economics is tremendously the unitasking.
QUESTION: minute 28.48 > " you're willing to give up 2.5 p for 1 c" is incorrect right? Looking at the graph (minute 29.18) the indifference curve looks like that you're willing to give up 2.5 p for 2 c as the interval on the x axis is not 1 but 2. Can someone either tell me that I am right, but more likely explain why I am wrong?
"You're willing to give up 2.5 P for 1 C" is correct. If you look at the graph (29:18) more closely, you will see that at point A, the value at x axis is 2, but also the value of y axis is 5. So basically, you are willing to give up 5 pizzas for 2 cookies which is same us giving up 2.5 pizzas for 1 cookie.
Probably something to do with structural inequality issues, for example an insurance firm may offer insurance to rich people, R or poor people, P. When P takes out insurance on their cheaper car, the risk of it breaking down are higher and therefore their insurance costs will be higher as a proportion of their income. This could take away P's ability to increase their wealth because the insurance costs eventually wear away their initial endowment. If the group used their money to buy cars to double their wages, they would not be able to afford good cars and thus they would be subject to high insurance costs, leading them back to a point of not being able to afford insurance or a car. This example is obviously not what happened but in built mechanisms can lead to greater wealth inequality over the longer term.
I feel like people shouldn't think of it as an entitlement but that their friends and neighbors that pay taxes want to help them, but want some say on how that money is spent. Also, wouldn't person y still be better off because it frees up $300 for more shelter. They're not $500 better, but they're not worse off.
AI push will eventually lead to a more universal income approach due to job losses but if you create a linear equation they haven't quite perfected the income but it's around $1250 a month. You would most likely need a a wide adoption of the digital dollar to track spending on illicit things
MIT budget restraints why they use chalk boards? I'm so distracted by this poor guy struggling through the series and hung up thinking of the opportunity costs.
Jonathan Gruber is such an incredible instructor, he and MIT should be immensely proud of these lectures.
Can u recommend this type of lec for macroeconomics? Pls
@@SakshiSingh-xq1ze there is one on UA-cam from another big American school.
00:00 Setting Up Budget Constraints
05:25 - - > Marginal Rate of Transformation
07:16 - - > Weight Watchers Example
12:16 Opportunity Set
19:15 Tangency
22:10 The Maths
31:00 Food Stamps Example
38:39 - - > Imposing Preferences
44:13 - - > Effective? (vs money injection)
Thank you so much :) Very nice of you!
Thank you so so much for publishing this. I'm an adult student finishing my degree with an online university and I cannot, for the love of God, understand a single word of the crappy tutorials that my university provides. These videos not only make everything a lot easier to understand but it also makes it so much fun and engaging. Thank you MIT and thank you Professor Gruber.
what uni did you choose?
Mr. Gruber makes microecon Waaayyyyyyyyy more interesting than my classes in my Masters!!! Thanks MIT!!!!
Lies again? Bet Clic Acura
Can u recommend any macroeconomics lecture series?
@@SakshiSingh-xq1ze Principle of macroeconomics by Missouri State University
Really in case of the previous lectures also so inculcating that generates so many models in my mind solving the crude level industrial problems.
If I don't have budget constraints I would attend MIT after high school.
@@arrowmouse this ratio seems low, here in India top stem universities (IITs) have 2,000,000 + aspirants and only 10k get in 😂
Their faculty vacations on Epstein’s island. I would never give them my money
@@yeahwhat6363 The quality of the Applicants are not the same lol
@@hainamtran2232 well said
You’re correct
Here's a Summary for y'all, the lecture is example heavy so there's not much to write
**Budget Constraints**
- MRT (Marginal Rate of Transformation): The Slope of the Budget Constraint
- Opportunity Set: Set of choices available to you given your income & market prices
- The Optimum (graphically) is the tangency between your indifference curves and budget constraints is the optimal constrained bundle.
See Figure at 18:36
*try to understand why D is the optimal choice and the others aren’t.
For example, Point C has a slope of 1/2. Which means you’ll not spend all your money.
- The Fundemental Equation of Consumer Choice,
MRS = -muC/muP=-pC/pP=MRT
At the optimum, The Ratio of Marginal Utilities equals the Ratio of Prices. i.e. The rate of which you want to trade of Pizza for Cookies is the rate of which the market will allow you to trade off Pizza for Cookies. In other words, the ratio of the benefits equals the ratio of the cost.
- Manipulating the equation above, muC/pC=muP/pP , which can be called the bang for buck equation i.e. your marginal happiness per dollar spent should be equal.
One Sentence Summary, **Marginal Benefit (MRS) = Marginal Cost (MRT)**
A good idea would be to download the transcript, play the video at 1.75 speed and look at the transcript and the graphs (could been found in the handouts section). If you don't get something you could play the video at lower speed.
I told my mom I was attending MIT she was so happy but little does she know my budget constraint only allows me to go to UA-cam University
lol
😂😂😂
Given my buget, 최상의 선택을 하는 것(=further indifferent curve)= tangency 를 구하면 됨, 그 bundle=optimal choice(AC)
This is going hand-in-hand with my online microeconomics class. Thank you so much for posting these lectures, I wish I took this class in person, but this makes up for it!
Professor Gruber is single handily saving my economics exam!!
let's assume that your parents have given you some amount of income, we'll call it "WHY"
Where are the black and red dots for the opportunity set?
im looking for them too
Absolutely love the way he explain things with ease and also with great examples with which you can relate.
I am not even economics students yet videos are bingeable it's really good
How to shut a student up: "That is a really good question and we will come back to that later"
😂😂😂
professor - Thanks a ton, i really loved the way you taught your class in simple terms i could learn a lot abt it.
Thank you so much for this excellent free education.
Are you on Facebook
Same. Really like these free lectures from MIT. Thankyou. They don't grant certification on MITopencourseware, but the free learning for anyone that wants to and get education from MIT is just fantastic.
40:00 i was getting really mad at Jon saying he was just doing positive economics when the choice of "shelter" as good B rather than "drugs" has obvious normative implications..... so i'm glad he addresses this, i should've had more faith in him :)
I hadn't budget, so I am attending MIT on youtube after graduation in my private Master degree programme
27:41 I don't understand the part "du/dp = 0.5xc / root (pxc)" why 0.5? Can any one help me?
dU/dP = d(root(PC))/dP = 0.5*C/root(PC)
Its just differentiation
@@shivanshsubramanian5525 where's the 0.5 from? and why 0.5*c／root(pc)....thanks..
@@王士豪-l6c The derivative of a function (ax)^n is a*n*(ax)^(n-1) where a is a constant. The square root of PC is equivalent to saying (PC)^(1/2) or (PC)^0.5, so if you're deriving with respect to P, P is your x, C is a, and 0.5 is n, so the derivative would be C*0.5*(PC)^(0.5-1) or 0.5*C*(PC)^(-0.5). x^-n is equivalent to 1/(x^n), a negative power just means you move it to the denominator, so you get 0.5*C/(PC)^0.5, and again, x^0.5 is the same as square root of x, so finally you're left with 0.5*C/squareroot(PC). If you do it with respect to C, C is your x instead, you get 0.5*P/squareroot(PC). dU/dP means derivative of U w/ respect to P, dU/dC means derivative of U w/ respect to C.
@@davidbarroso8523 thank you so much. I was confused but I see now
@@ahmettayyipaydin6925 thank you so much broo
i just wasnt thinking of taking c as constant and your explaination cleared it up
He is simply one of the best , Respect 💡
Insightful and incredible lecture as a professional in my views.Liked the topic nd informative lecture nd important tips including formulas nd curve diagrams which makes the lecture simple.kindly elaborate how to uplift people who are below poverty line??. What steps are taken nd Strategies recommended? What about the Budget nd Budgetary control nd allocation to keep economy on right track? Useful nd inspiring important tips.Thanx sir.
In the post Covid days the budget constratint has its niche to identify the inflationary rate in case of buying the inventory in case of Economic quantity demanded with the revised assumptions.
Hence,its most pivotal for the downward slope in the production curve of the industrial phenomenon.
Hence,all the subsidirat affecting the quantity demanded will be the hardest portion which needs the utmost discussion often.
Thus marginal replacement of goods may be a hugh value in case of diminishing of marginal returns in case of managers.
These free courses are very useful for students from a third world country like me.
26:12 watch continue to see food stamps and cash transfer
This lectures are so good it's feel it's made by some mit instructor
I already passed my UG: why I am watching this?
It's an addiction, lol
Yo I am addicted to isekai mangas and webtoons and been using all my concentration skill to focus on this class
Yours is good addiction
12:54 Where are these black and red dots he is talking about?
Here maybe he's talking about the attainable and non attainable combinations where initially the dots were up to previous budget line but now they are within new budget line(black ones) and the remaining between new and previous budget line (red) are not attainable.
anyone care to help me on 27:59 why MuP=dU/dP has a equation of 0.5xC?? where does the C comes from? I am totally fine with the derivative part, I know where the 0.5 comes from, but C?? why Mu of Pizza has anthing to do with cookies?
the question actually translate into how to calculate dP... I forgot all my learning on derivatives of that part.
C is a constant there. Consider the derivative of (ax)^n=na(ax)^(n-1). Therefore, derivative of (PC)^(.5)=.5C(PC)^(-.5), which is .5C/(PC)^(.5)
see the chain rule and partial derivatives
Does anyone know where 0.5 comes from in 26:50 ?
Thanks a lot!!
It is from derivation of the squareroot like the derivation of squareroot of xy is (1\2 times square root of xy )times the derivation of xy itself.....i am not sure if I explained it in understandable way but I suggest you to derivate the function by yourself first and crosscheck it
I think it comes from the fact that the Pizza is worth twice as much as the cookies so P_c/Pp = 0.5. Not sure exactly but that's what it seems.
This just made life in college a whole lot easier.
Excellent lecture, I'm finding this course very useful.
However, I have a doubt about the last example, regarding the SNAP program and the effectiveness of so-defined "paternalism": Prof. Gruber said that, since giving poor people food stamps instead of cash made them buy 15% more food, that choice would not be that good because that constraint would make those people less happy, so it is better to just give cash and make them do the choice.
But if, for example, the goal of the government was to fight malnutrition, wouldn't then be better to force poor people to consume that 15% more food? I feel like the topic was not treated deeply enough to cover these (in my opinion, relevant) cases
Am I just seeing things, or is this graph drawn wrong? The formulas written are “12P + 6C” and “18P + 6C” but to me, it looks like what’s being plotted is the inverse… 11:27
At
29:05 how is market telling that we can trade a cookie for only half slice of pizza?
Because the price of one cookie is $6 and price of one pizza is $12. So you can trade 2 cookies for one slice of pizza (essentially one cookie for half slice of pizza)
Very nice! Also this showed that 4Ps (in the Philippines) is not a good aide to alleviate poverty.
What you described at the end really is the saying, you can’t make a poor man rich. The concept of wisdom over dolllars. Teach a man to fish type of thing. People who get money quick don’t know how to manage it unless they have earned the wisdom prior.
Drafts : 36:00
where can i find the "math" part of the course. 19:15 he said they will do more mathmatically on friday
I didn't go to MIT, but when I took Microeconomics we did all the math in our quiz sections and not during the lecture.
@@rm2kmidi do you know how can I get quiz that they did?
@@lucayan7982 not a quiz. Quiz sections are smaller class groups you attend, usually lead by a TA. So the students would be learning this on non-lecture days.
@@lucayan7982 "Quiz Section" is what we call the smaller breakout classes in large lecture classes at universities in the US. It doesn't have anything to do with quizzes or taking tests. Typically you attend lecture three times a week and attend quiz section twice a week. I was just explaining that the math-oriented parts of this class were likely all discussed in smaller groups with the teaching assistant and probably wont be on video. At least that's how it was when I was in school.
@@rm2kmidi thank you for the clarification
This guy is an awesome professor
Thanks a lot it is so useful and it helps me alot for my economics study❤
Can someone explain why A offers more utility on less budget?? I mean-- MUc/MUp > Pc/Pp??
it might be arising out of the budgetary notion in case of planning or strategizing for the optimal output or utility in sense of personal micro Economics to derive the high value of constrained budget of the whole in case of the value generation of the industrial output.
Bingeing on Prof. Gruber's lectures.
In lesson 2 professor Gruber mentioned addictive behaviour, like smoking, can change your utility function over time. So I think an idealized perfectly rational agent should take this into account, but in practice doesn't look so simple. In these cases, are economists more amenable to some form of paternalism?
Look for Richard Thaler and Cass Sustein. They coined the term "libertarian paternalism" and it's well used in behavioral economics as a whole. 😊
In case of the optimization of life's own temporal value,the most optimistic way in the risk dissoluted scenario of the macroeconomic behaviour,it's really the inverse utility of paternalism if we don't accept the indifference to the smoking habit,the utility of other habits like overeating or any kind of portion that affects the micro temporality creates a long difference in the human behaviour.
In that context one indifference of temporality comes in my way of thought as the technical improvement in the world of cheap and sustainable technical imposition to increase the micro utility to support the entire product mix would be a great strategy concentric in case of the product generation.Hence a complete inversion of inverted utility to the actual utility function hence,the same is here the increase in marginal utility by relinquishing the smoking habit would be far more better replacement of everything having high utility function including a saviour in the irrational behaviour to the human being the high penetratiin of sustainability.
38:42 I still don’t get why there is a horizontal line from 5000 to x2, could someone explain?
hey hey. Because government gave the poors the debit card which can be only used for food, the people cannot use this money for shelters. Therefore, people cannot spend any money to shelters and now it has restricted in that 5000
As someone who came from Architecture to economics, know things different.
In architecture it's said - less s more
In economics - more s better than less
Can u recommend series lecture of intermediate macroeconomics ?
@@SakshiSingh-xq1ze macroeconomics k liye nptel k kaafi ache hai lecture
Wow if I can ask what made you switch from architecture to economics?
two different types of monotonicity. i guess making nothing in architecture is the best then
What if I found a place that sold $5 cookies and not $6 so I could buy more for less? How would this effect the equation after the fact? I see how it’d stay if the $5 cookie was the original price but let’s say it’s not..? That or like.. what if there’s a sale?
Can a person compare more than two variable at a time? Is his focus of attention not limited to two things? What's the point of creating three dimensional plane that represents some models of economics?
I don’t understand 16:00 the question :
Changing slope does not affect if one buy more cookies than pizza and overall decrease in income affect all.
Please help me thanks
Your question is hard to understand, but I can explain that because the slope is the ratio of the quantity of cookies to pizza, changing the slope means you change the quantity of cookies or pizza or both (see algebra)
he is saying that the budget changes (since your disposable income decreases) but the proportion of trade-off between two products remains (since the price of each type remains and the value of each type for you is the same. i.e. the marginal substitution for you is the same). you see the parallel shift of the budget lines but the slope remains.
what prior knowledge of economics is needed to understand better. This is my first economics class.
From the syllabus, "There are no prerequisites for this course, although some calculus at the level of 18.01 Single Variable Calculus will be used. " See the course on MIT OpenCourseWare for more info and materials at: ocw.mit.edu/14-01F18. Best wishes on your studies!
I'm just a small successful business owner just soaking up this information. Don't mind me....
I got lost with the optimum constraints calculation, any help here please
Absolutely well done and definitely keep it up!!! 👍👍👍👍👍
Simplying assumption: Budget=Income
5:25 MRT
Shocking the System
17:05 *Constrained Choices*
30:58 Example of food stamps
POV: you're searching for the notes.
I love this lecture. I'm economist who want to learn more.
Shouldn't the decrease in budget constraint (imposed by parents) lead the students to opt the cookies more because they are cheaper and hence the slope of curve to change (increase -vely) thus creating a fractional MRT?
MRT is the ratio of market prices of two goods. It is independent of your income or budget constraints. The decrease in income will in some combination lower both the amount of cookies and the amount of pizza. However, the exact combination by which pizza slices and cookies get lowered depend upon your utility function which ultimately makes your indifference curve.
27:27, where did the 0.5 come from??
This course would be considered an intermediate microeconomics course at most universities.
Where can I watch the math courses guys? The ones he says are on friday...
Thank you for publishing these!
If I were a Math/IT/Science student back at high school, and without budget constraints, I would have applied for MIT
If you were that high school student, we would tell you to ignore the budget constraints and recommended you apply anyways. 🙂 MIT is need-blind and full-need. If you were accepted, MIT would make sure you could afford MIT tuition... even if they had to fully cover it. Visit sfs.mit.edu/undergraduate-students/the-cost-of-attendance/making-mit-affordable/ for more info.
@@mitocw this comment made my day today! :)
Giving cash is not generally a good choice To often the cash is waisted or someone takes it away from them.
Explaing these concepts without calculus must be difficult for him. And its actually very confusing for the math folks too.
Does anyone know how to access the recitation for the course, or if its available.
Recitations are not available for the course. To see what we do have, visit MIT OpenCourseWare at: ocw.mit.edu/14-01F18. Best wishes on your studies!
@@mitocw tnx.
@@mitocw QUESTION:
minute 28.48 > " you're willing to give up 2.5 p for 1 c" is incorrect right? Looking at the graph (minute 29.18) the indifference curve looks like that you're willing to give up 2.5 p for 2 c as the interval on the x axis is not 1 but 2. Can someone either tell me that I am right, but more likely explain why I am wrong?
.@dennis7928 I think it's 2 c for 5 pizza ,maybe I am wrong.mathematically it's 1c for 2.5 p
what is du/dp? 26:54 ?????????????????????????????????????????????????
Derivative
The derivative of a function (ax)^n is a*n*(ax)^(n-1) where a is a constant. The square root of PC is equivalent to saying (PC)^(1/2) or (PC)^0.5, so if you're deriving with respect to P, P is your x, C is a, and 0.5 is n, so the derivative would be C*0.5*(PC)^(0.5-1) or 0.5*C*(PC)^(-0.5). x^-n is equivalent to 1/(x^n), a negative power just means you move it to the denominator, so you get 0.5*C/(PC)^0.5, and again, x^0.5 is the same as square root of x, so finally you're left with 0.5*C/squareroot(PC). If you do it with respect to C, C is your x instead, you get 0.5*P/squareroot(PC). dU/dP means derivative of U w/ respect to P, dU/dC means derivative of U w/ respect to C.
marginal utility of one unit of product A divided by that of product B. this indicating the marginal substitution between these two products to remain the same level of utility.
Can y'all tell me why that cash given to Africans boosted their income in short run and the effect got nullified in long run?
I was searching for guy who post notes of lecture in comment . But sadly didn't find .
Same lol
One point I wanna make to the "food/shelter" case, if most people living below the poverty line do prefer shelter, it is better to not give them cash but other life essentials. Because if everybody spend more money on shelter, they would just drive up the low-end housing price. Because they are the target group of that market anyways, so if all of them are capable of/willing to pay more money, the competition'd make price goes up and money goes to the landlords.
where did 0.5 come from when doing MUp and MUc?
These equation is quite tricky to make the indifference in the buying behaviour of the product in case of obtaining diligence of his entire family.
It seems the Economics is tremendously the unitasking.
the chain rule
Budget constrained is key to happiness
Finished, thanks for sharing
QUESTION:
minute 28.48 > " you're willing to give up 2.5 p for 1 c" is incorrect right? Looking at the graph (minute 29.18) the indifference curve looks like that you're willing to give up 2.5 p for 2 c as the interval on the x axis is not 1 but 2. Can someone either tell me that I am right, but more likely explain why I am wrong?
"You're willing to give up 2.5 P for 1 C" is correct. If you look at the graph (29:18) more closely, you will see that at point A, the value at x axis is 2, but also the value of y axis is 5. So basically, you are willing to give up 5 pizzas for 2 cookies which is same us giving up 2.5 pizzas for 1 cookie.
My marginal utility is very high so i intend to attend mit
3:30 they are delicious and equally expensive
Summary:
sometimes we just have to tangent our Pp more often, it's called marginal utility.
Ummm, this is 2:23 MIT level 2018? Smh, seriously
Thank you MIT
We are forcing them on Food Stamps, because Someone who is below poverty line will use Cash for other purposes.
Can y'all tell me why that cash given to Africans boosted their income in short run and the effect got nullified in long run?
Probably something to do with structural inequality issues, for example an insurance firm may offer insurance to rich people, R or poor people, P. When P takes out insurance on their cheaper car, the risk of it breaking down are higher and therefore their insurance costs will be higher as a proportion of their income. This could take away P's ability to increase their wealth because the insurance costs eventually wear away their initial endowment. If the group used their money to buy cars to double their wages, they would not be able to afford good cars and thus they would be subject to high insurance costs, leading them back to a point of not being able to afford insurance or a car.
This example is obviously not what happened but in built mechanisms can lead to greater wealth inequality over the longer term.
English or Spanish?
Thank you for this.
Thanks MIT
19:36
Move in with someone and give them your food stamps for shelter, go to the food bank for food.
2:00
λ*, Mv = Mp ? The best deal. ? P = MR = MC ?
While price goes for Marginal revenue then there comes the law of diminishing returns in the case with Marginal cost equating price as well.
oh yeah!
Is this an undergraduate or graduate course?
This is an undergraduate course. See ocw.mit.edu/14-01F18 for more info and materials. Best wishes on your studies!
Never thought of SNAP as paternalistic, make me think of universal income, maybe cash to everyone is not a bad thing.
I feel like people shouldn't think of it as an entitlement but that their friends and neighbors that pay taxes want to help them, but want some say on how that money is spent. Also, wouldn't person y still be better off because it frees up $300 for more shelter. They're not $500 better, but they're not worse off.
AI push will eventually lead to a more universal income approach due to job losses but if you create a linear equation they haven't quite perfected the income but it's around $1250 a month.
You would most likely need a a wide adoption of the digital dollar to track spending on illicit things
MIT budget restraints why they use chalk boards? I'm so distracted by this poor guy struggling through the series and hung up thinking of the opportunity costs.
Interesting college professor
He definitely makes the subject of microeconomics interesting.
vox being a good policy website? That just makes me misstrust completly the opinion of this Professor.
its 20 under the root, not 10.
yup UBI everyone, its actually better than government subsidize programs and such😆
Nice..
Nptel lectures are way better than mit courses but i thank mit for the free courses though...
lol
Not way better but both r comparable nd good for students like us(budget constraints)
Are bhai chup chap pdh le na , dono ache hai
I am late but at perfect place
👍👍
I just gave this video it's 1k like, because I like pizza and cookies
Math police stop. Criminal use of variable conventions.