Intro to Austrian Economics – 1 of 4 – Scarcity and Choice

Austrian Economics: An Introduction, presented at New York Polytechnic University in 1972.

1. Scarcity and ChoiceEconomics begins with the concepts of scarcity and choice. If there was no scarcity it would all be free. Resources like time and materials need to be allocated to economically feasible uses. This will depend on the consumers’ demand for the final product.

Source: Intro to Austrian Economics – 1 of 4 – Scarcity and Choice – YouTube

http://www.readrothbard.com/intro-to-austrian-economics-1-of-4-scarcity-and-choice

TRANSCRIPT
00:00
Well economics really begins with the
00:04
concept of scarcity and choice the we
00:07
hear a lot of lot of material a lot of
00:12
writings and the Press by sociologists
00:15
and Electress and other such low types
00:18
and the most hyped intellectual that
00:21
we’re now living in a purse care for the
00:23
age and that maybe in the United 19th
00:27
century the other was such a thing as
00:28
economics 19th century was economics of
00:31
those spices and things like that you
00:33
had to worry about things like supply
00:35
and demand but now in the 20th century
00:38
are especially in nineteen post 1970 we
00:42
now live in a post-scarcity age we all
00:44
have to worry about such thing as
00:45
scarcity and now they’re not anymore
00:47
economics well the first the first thing
00:51
the economist any Thomas is trained to
00:53
think in terms of is this is wrong
00:56
nonsense because everything is scarce if
00:59
it wasn’t scarce great very good pest I
01:02
think the one something is scarce or not
01:05
when resources are scarce or not if it
01:08
is a scarce and everything will be free
01:11
and not only free but immediate
01:15
instantaneous at hand the I like to call
01:18
the Garden of Eden model the Garden of
01:23
Eden model especially that as soon as
01:25
you wish for something it’s right there
01:28
soon as you wish for the bottle of Pepsi
01:30
is trickling down your throat with no
01:32
effort or investment of resources and in
01:34
anybody’s port now we obviously are not
01:39
in that kind of situation we never will
01:41
be in that sort of situation and if we
01:45
were in anything any way of
01:47
approximating that situation would be a
01:49
we would be in a state where everything
01:53
was more or less almost framelits and
01:55
you have a life to be sewing as a nickel
01:59
Oxman and when we get to the stage where
02:02
Cadillacs are nickel or Pepsi is quickly
02:05
now you have show that your wish then we
02:07
can think about revising or scrapping
02:09
economics
02:10
we’re utopian with scarcity future the I
02:16
used a play and the base very good
02:20
debating tactic against a post-scarcity
02:24
pipe couple years ago I said that if you
02:27
really really live in a world would play
02:29
scarcity know you people were talking
02:31
about post-scarcity will be burning your
02:33
salary checks no point in having a
02:36
salary to breathing free etcetera and
02:39
Lee my opponents shot back of the
02:41
statement well since you live in a we
02:43
switch to live an evil capitalist world
02:46
everybody’s brainwashed by capitalism
02:48
there for da king they haven’t gotten to
02:50
this point yet where they can throw off
02:52
the shackles OIC seeking obvious
02:56
obviously evading the point that
02:59
everything is skiers okay the mia
03:05
resources are scarce resources
03:08
consistent prime material objects the
03:17
end and all sorts of consumer or capital
03:22
goods we haven’t got explaining them yet
03:26
but we have to do with these resources
03:29
we have to make sure the resources are
03:31
allocated to the most useful most
03:33
important ends raw a little other than
03:35
the porous bands and here we get to the
03:38
difference between economics in one hand
03:39
technology on the other many people are
03:41
really see the difference
03:43
technologically lots of things are
03:45
possible feasible or not even feasible
03:47
at all economically for example it might
03:50
be it might be I don’t know since I’m
03:51
not really technology we like
03:53
technological expert it might very well
03:55
be technologically possible the Bill of
03:58
tunnels from here in San Francisco not
04:01
only that but online and platinum and
04:03
precious jewels so it might very well be
04:06
possible I will take of course 20
04:09
trillion dollars at something and we
04:11
wouldn’t they will eat for about five
04:12
years what we could do it the question
04:15
that is should we do it what are we
04:17
giving up in a process of doing this and
04:22
so it
04:23
a ton of that sort of tone might be
04:25
technologically feasible but obviously
04:27
be economically unfeasible economically
04:30
unfeasible meaning of the resources the
04:33
precious scarce land labor capital which
04:38
would have to be used to build with the
04:40
silly tunnel would much better be you
04:43
much more more properly used producing a
04:47
food TV sets clothing or automobile two
04:51
separate sets all things that we need
04:52
much more than we need the tone so the
04:56
economic problem of a problem of
04:58
allocating scarce means scarce resources
05:02
to the most important ends rather than
05:05
the least important matters and mattify
05:07
the definition of waste which is really
05:09
any kannamma concept rather than a
05:11
technological concept definition of ways
05:13
this is taking resource scarce resources
05:17
and applying them to the less than the
05:19
most important as for example living
05:21
this tunnel might be sigma might be a
05:23
great tunnel entrance through might be a
05:25
feasible tunnel how am i hold up might
05:29
not know collapse but in other words it
05:32
be technologically feasible but there
05:37
will be a waste of resources because
05:38
almost anything else done with 23
05:41
trillion dollars we better than wasting
05:44
it on this tunnel so the economically a
05:49
ridiculous thing that would be
05:50
technologically feasible ah alright i
05:55
like to this point go into what what’s
05:58
known in economics is Crusoe economics
06:03
Crusoe is a very interesting figure here
06:07
first of all students tend to get very
06:09
confused this point I why we worry about
06:11
Robinson Crusoe let’s be worrying on the
06:13
modern the modern world and I try to
06:16
tell them that’s white that I’m not
06:19
really I don’t really care about
06:20
Robinson Crusoe the of it the purpose of
06:23
couse I economics is the isolate the
06:26
first to take one person one man and pin
06:30
him visa V nature so to speak and
06:33
isolate one man visa V nature and then
06:36
see what happens
06:37
you know we can analyze his actions and
06:40
then then bring in other people bring in
06:43
friday and other people etc because we
06:46
find out we can we can grasp our most of
06:49
the basic economic concept just by
06:50
studying the actions of Robinson Crusoe
06:54
okay let’s go take Crusoe on a dozen i
06:56
won let’s say well it’s better if it’s
06:58
not a desert island it’s a pretty
06:59
bountiful island but really it does it
07:01
or I only be in pretty bad shape he
07:04
shipwrecked he starts off I sports all
07:08
but certain certain resources that his
07:11
coming what we’ve got his own personal
07:12
energy commanding this personal energy
07:17
has own technological knowledge built up
07:19
over the course of the years who knows
07:20
how to make in that goes out uh yeah I
07:23
can bow an arrow and what sort of stuff
07:26
I was kind of build a log cabin and so
07:29
forth so he has technological knowledge
07:31
he knows when he what me and he said he
07:34
knows when NZ wants to pursue like he
07:36
has lots of man’s he has to pursue very
07:37
very quickly or else he’s going to die
07:39
out such as finding food shelter
07:41
clothing etc and then he looks around
07:46
for the limited resources his command he
07:48
tries to achieve place the rule as
07:51
little as possible achievers his most
07:54
important ends with the resources we’ve
07:56
got he tries to achieve is most
08:01
important values with a limited time and
08:03
resources available he’s okay so he got
08:07
his personal energy he went off he has
08:09
he got he’s got nature nothing island
08:12
whatever that happens to be so he starts
08:15
off part of his personal energy and
08:21
nature even the two original resources
08:24
they’re cool energy is cool and here we
08:29
here we have a heritage from 18th or
08:31
late 18th century early 19th century
08:33
economics personal energy is called
08:35
labor now this is called a lot of
08:38
confusion over the years because when we
08:40
think of labor now we take away one
08:42
toilet aryan terms and watching in terms
08:44
of somebody was employed by Utley on by
08:46
employer this is not what labor means on
08:49
any
08:49
economic language labor means anybody
08:52
who’s in using personal energy in the
08:54
process is just a production the process
08:58
of production haven’t explained what
08:59
production is yet anyway anybody who’s
09:01
using personal energy in the pocket of
09:03
the production would be a laborer so on
09:06
that basis and that for example where
09:08
the president of General Motors would be
09:09
a laborer this sense the stockholder
09:12
simply simply trip clipping coupons or
09:15
not the alike so anybody who’s involved
09:18
directly using using personal energy is
09:21
using labor this is the original 18th
09:22
century early 19th century definition
09:25
and they and then there’s nature the
09:28
nature will have another term for it and
09:30
economics which is again means sort of
09:33
the same thing they’re not quite which
09:35
there for at least a lot of confusion
09:36
that’s cool and so a reason why it’s
09:41
sort of the same thing but not quite is
09:43
that it’s true there’s land there and as
09:46
you notice there’s the for what so on
09:48
but they’re so for example is river has
09:51
fish in it well the river was cool and
09:54
and economics economic theory in common
09:58
sense English it would not be cool and
10:00
be cold water so another person land
10:04
includes water now the other hand land
10:08
and economics is not exclude any
10:10
structure any man-made structure built
10:12
on top of it it’s the original nature
10:14
given resource the mean when a land
10:18
would include the bit of space
10:19
underneath this building we’re not the
10:20
building on top of it that’s not lying
10:22
of course usually we type of thinking
10:25
again in the common sense English you
10:27
can tend to thinking of land including
10:28
the buildings on top of it so so here’s
10:34
Crusoe he has a booze she set out
10:37
himself his values she’s trying to
10:40
achieve and he’s got the limit of scarce
10:43
resources land and labour which he has
10:46
to apply very quickly to this to
10:49
achieving these ends now the ends that
10:51
he has to achieve he ranks on a scale of
10:54
values he has to rank them because he’s
10:57
got to choose how’s the allocated time
10:59
for example does he spend the next three
11:02
looking for berries or hunting fish or
11:04
whatever so you gotta decide whether he
11:09
decided how to allocate his prime in the
11:11
basis of a value scale and the value
11:14
scale I think it doesn’t have to be very
11:15
elaborate the matter of fact of
11:16
something like example again I used for
11:20
students as you know choice of how to
11:23
spend a block of three hours tonight and
11:25
you have you know like eight choices you
11:27
actually have a lot more in New York you
11:29
know there’s half a dozen movies a party
11:31
and concert so forth and that way down
11:34
the list is meeting your homework number
11:37
twenty or something you make this make
11:39
up a little chart for yourself and you
11:42
pick what you think is going to be the
11:43
highest in your value scale you allocate
11:46
your three hours to that so this value
11:51
scale the rate is it I think it’s
11:53
amazing like what the how much heavy
11:55
weather is made out of a very simple
11:57
concept economics how much millions of
12:01
wasted words have been spent on this
12:03
topic any right its really fairly simple
12:07
concept basically mainly that it’s a
12:10
strictly ordinal scale first place in
12:12
other words it’s that your ranking the
12:15
first movie second moving a third movie
12:17
you’re not saying well I think I would
12:19
prefer you know this movie 2.8 times
12:22
more than the second movement Tommy’s
12:24
nonsense everybody mean by 2.81 you’re
12:28
making it was strictly ordinal choices
12:30
and rankings for a second if their
12:33
locker for this first the second the
12:35
third anything else is really going on
12:39
sort of sure is really meaningless if
12:41
you say at the first seen this person
12:43
2.7 times more than seeing that person
12:46
it’s ridiculous though unity which you
12:49
can use for measurement so so who saw
12:53
anybody else ranks his values on this
12:56
back of a wooden will value scale and
12:58
the scale can change over time it
13:01
usually does people learn more they
13:03
satisfy one one another one pops up and
13:05
so forth and of course different people
13:09
have different values and different
13:11
value scales they might have you in the
13:13
same that
13:13
is a different rankings for them but the
13:17
point of this is you have strictly Oh
13:19
ignore cannot be measured really still
13:21
being fought out an economic needs
13:23
amazing thing but I guess people need
13:26
something to do probably remedy okay so
13:32
kuso Crusoe finds he finds the nature is
13:37
bitterly we say no there’s well you guys
13:40
that personal energy all right he’s got
13:41
the screen there and a fish there’s not
13:44
too much else so he’s going to work hard
13:47
to do what I work hard to pick to you
13:49
that the Natural Resources take the land
13:52
and transform it very quickly into uses
13:59
and methods at a pattern by which sure
14:01
he can start using enjoying the fruits
14:04
in other words yes to stab that getting
14:07
have to construct the bow and arrow and
14:09
hunt year or something berlinetta hunt
14:13
fish I’ve got a log chopped down get an
14:15
ax and chop down trees and go to log
14:17
cabin so it’s only after he gets the the
14:21
fish and after he gets the and nobody
14:23
was the fish you want the fish in the
14:25
cabin in the and the deer in the meat
14:29
that he wants the other stuff or simply
14:31
means byways path by which he finally
14:36
gets the lead to the desired direct use
14:40
the direction the likely useful products
14:43
that he watched actually uses there’s
14:46
this final bill a cool consumer goods so
14:49
he eats the fishing lives in a log cabin
14:52
really linea eats the meat and so forth
14:55
this is we wear the clothing these are
14:58
the wrecked consumer goods everything
15:00
else everything else in this process of
15:04
transformation of getting from the
15:06
original nature natural brook and so
15:09
forth band of the consumer good all
15:11
these other things a court capital goods
15:14
so now we have all these other things
15:20
are called capital goods
15:26
the so now we have the category of
15:30
capital goods which are stations on the
15:34
way to the consumer good anything else
15:36
anything which is not either personal
15:38
energy or land original land although is
15:43
not directly useful which our consumer
15:47
do all these other things are capital
15:48
goods cavity lives are just very
15:52
heterogeneous obviously consistently
15:54
sorts of stuff for example in the case
15:58
of krusell is only the Axum there’s not
15:59
too many of the axon than the bow and
16:04
arrow maybe of both of these they will
16:07
construct one in a modern world getting
16:10
back to the modern world with an
16:12
enormous number of capital goods of all
16:14
sorts of processes and stages of this
16:17
process this transformation process at
16:19
Sally the transformation process called
16:21
production so we mean my production of
16:23
the use of personal energy operating on
16:26
land and a transforming land into the
16:29
process of the capital good to finally
16:32
get to the consumer good a place for
16:35
example early stages of production that
16:37
are involved in me finally eating a ham
16:41
sandwich more the enormous number of
16:45
stages involving millions of people
16:47
literally and scattered all over the
16:52
world the this well I can’t even trace
16:57
little stuff going back you start just
16:58
with a ham you have to go then go to the
17:01
wholesaler of a ham and on the jaw birth
17:04
then the meat packer and then the
17:07
slaughterhouse an done back to thee so
17:09
the pig razor and then back to the corn
17:12
razor who feeds the pig two points on
17:15
the machinery that’s using this process
17:18
plus the land that’s using one with
17:20
stuff plus the trucks that are used to
17:23
transport them and higher my gasoline
17:25
only play and reduce all the way back so
17:27
many many decades and scattered over a
17:30
large area and all these things in the
17:33
process of in the process of production
17:36
whether it’s the whole say
17:38
oh there’s a stock back yard the trucks
17:42
or the inventory of armor ham or
17:46
whatever all these things are capital
17:47
goods until they finally get to the
17:49
retail store and restaurant you buy them
17:53
and then I press will you get to the
17:57
bread the whole process going up to the
18:00
flour and the Miller and lowlifes stuff
18:02
from back to the week former crushing
18:04
machine way way back and we get to the
18:07
butter on the bread you go through the
18:09
whole process again so amount of capital
18:12
rid of enormously each stage of
18:14
production my and labor is involved in
18:17
this whole whole process okay we have we
18:28
have crusade allocating his resources
18:35
now going back to Crusoe allocating his
18:38
he has let’s say a bunch of logs the
18:42
famous example used by bomb bother
18:44
Austrian economist it has a bunch of
18:47
logs each of which are homogeneous in
18:50
other word each can be memory is just as
18:52
good as each law they’re just as good as
18:53
every yellow log I think of Limbaugh
18:56
barracks example of your horses which is
18:58
trickier but there’s some horses might
19:00
be different for the olive were stronger
19:03
faster whatever so here’s a here’s
19:11
Crusoe a certain number of horses excuse
19:17
me so remember Lord if he has various
19:19
uses he can fry them too he arranged as
19:23
he uses on a value scale ordinal value
19:25
scale which could be something like this
19:27
again there again depend on his personal
19:32
choices and his needs of the time except
19:34
it can be something like this ranking
19:36
number one fire to cook cook tonight foo
19:43
number to liking members and I think
19:45
second billing us only offense right
19:51
third people was that in third they’re
19:54
extending along cabin like it forth
19:57
storing the logs for tomorrow’s food and
20:01
making set the real luxury item billion
20:03
brewery what kind of the beach season
20:04
that gets people with fans okay so yeah
20:08
I can see how let’s say he’s five
20:09
alternative uses for his logs well the
20:15
point is that the it’s a hazmat suit if
20:20
he has 55 laws available you’ll then use
20:23
well then satisfy each one of these five
20:26
uses when satisfied first second third
20:29
fourth and fifth use he has only three
20:31
available when he’s going to allocate
20:33
under the first second or third rank use
20:35
and leave the fourth and fifth
20:37
unsatisfied because obviously he’s not
20:39
going to buy the building a little walk
20:41
if he can’t hear he has enough of that’s
20:43
true to me tonight that sort of stuff so
20:46
if he loses if he happens to have he has
20:51
to have three logs available he loses
20:54
one one gets washed away by the tide of
20:56
something then the value that he places
21:00
on this on this log loss of a log how
21:05
much it means to him is the making of a
21:06
third the third rank used because the
21:11
third one IQs he’s giving up the other
21:13
hand has five long it gets me loses one
21:16
he’s losing only the fifth ranking use
21:18
and still on the other hand if he has
21:24
only one log on that I cuts washed away
21:26
and it doesn’t eat tonight he’s gonna
21:27
feel very badly you can move the
21:29
highest-ranking use so from this we
21:33
conclude the first great law of
21:37
economics mainly that the more he has of
21:44
a product more anybody has replied I the
21:47
LORD
21:56
lower that would be any unit lower any
22:07
value will be placed on any given unit
22:09
of that product in other words if
22:14
somebody has a lot of something he loses
22:15
one of it he will that would not mean as
22:19
much to him I’m up here anchors hi to
22:20
him as if he has only a little bit ly
22:22
loses one one of them this is cool the
22:27
law of diminishing marginal utility the
22:30
utility means the same thing as value in
22:33
economics again it’s a peculiar use of
22:35
the term because utility usually is
22:37
stored as meaning something which is
22:39
concretely useful or technologically
22:42
useful it’s not an economic system word
22:45
utility applies to valuation really
22:48
subjective value on the part of the who
22:50
saw anybody else happens to do the
22:52
valuing so in so we just replace utility
23:00
x value sort of saying woulda known
23:02
evaluate ility for the same wooden
23:04
overvalue scary play or no utility scale
23:06
very simple a marginal refers to the
23:09
individual unit you lose one unit or you
23:12
gain one unit of something this is so it
23:15
refers to concentrating on individual
23:18
units either giving up a unit or gaining
23:20
a unit so one of diminishing marginal
23:22
utility means if you increase your
23:25
supply of something I have to fly muni
23:28
any units of whatever product you’ve got
23:31
the increase your supply of something
23:33
the amount that you will value each
23:35
given unit will be less you decrease
23:38
your supplies up like emanuel value at
23:40
any given you it will be greater this
23:45
could be obviously seen with i’ll take
23:48
for example water the amount of
23:51
utilities you would place on any given
23:53
laughs of water right now it’s pretty
23:55
low yeah you can set you can go out with
23:58
a look to the whole down here and get
24:01
some that’s amore not going to pay much
24:03
for example
24:04
for a war for a glass of water most
24:07
cases in New York can get together free
24:09
almost the other hand here trudging that
24:12
across the Sahara on your back you know
24:14
you can’t teen is just about giving out
24:15
and your supply of water now is almost
24:19
zero you’re going to pay a heck of a lot
24:20
for it some ways you approaching Oasis
24:25
because in New York City your amount of
24:27
water is very abundant the number of
24:29
glasses of water available very abundant
24:31
and so the value place in any given
24:34
glass is very low you don’t have your
24:36
endless Sahara supply water is race is
24:40
very small it’s the amount of value you
24:44
place in any given glass extremely high
24:46
so that’s the law of diminishing
24:48
marginal utility one might think this is
24:50
fairly obvious but there’s a little
24:53
great truths and Sciences Social or
24:56
otherwise there’s only obvious answer
24:59
some of these thought of it because
25:01
centuries were spending were and what
25:03
worried about problems we were finally
25:05
solved with a long measure more utility
25:07
be more specific classical economics
25:10
which came in in late 18th century in
25:14
the early nineteenth and mid 19th
25:17
century was hung up on a certain basic
25:19
problem they couldn’t they couldn’t
25:20
really analyze consumption very much
25:25
because they came of course before our
25:28
basic philosophical problem so to speak
25:30
you know I’m like they say look here’s
25:32
bread the owner bread is very important
25:34
to staff of life and all line yet but is
25:36
really cheap price of bread ovens whoa
25:40
the other hand here are diamonds which
25:42
are everybody knows that were luxuriant
25:44
cookery and so forth and so on that
25:46
they’re very expensive how do we here’s
25:48
a known as the references this is over
25:50
many years of the value of paradox and
25:52
they couldn’t understand them more than
25:54
what it can’t solve it they couldn’t
25:56
solve it they finally said the classical
25:58
economists finally said well the only
26:00
way only thing we can say is that there
26:02
are two kinds of value you sad you and
26:04
value in exchange and we have to say the
26:07
bread is high in use value and low and
26:10
change your value and vitamin diamonds
26:12
are blowing you spawn your client
26:13
exchange factor
26:14
not a very satisfactory way of handling
26:17
the problem the obviously the best they
26:20
could do and other types of the price
26:22
like honest I really will try my
26:23
consumption zip-zip they were two
26:25
businessmen them they can analyze much
26:27
more readily because if they can analyze
26:30
me our profit mechanism that’s our stuff
26:32
but this was a big hole actual
26:35
discussion what’s this this problem of
26:38
value paradox let’s finally solved the
26:41
early 1870s with the arrival of
26:43
so-called neoclassical economics where
26:46
as in many other cases of history of
26:48
science or invention the given problem
26:51
was solved by several people
26:53
independently in different countries in
26:55
this case carl menger in austria and
26:59
william Jevons and england and they are
27:03
all raw miles on switzerland each one
27:07
came up with independently with
27:08
efficient form different ways of solving
27:10
this question to basically remember the
27:12
similar solution namely well namely what
27:16
they said was I’m a market people don’t
27:18
deal in terms of sold off i convert
27:20
without the category note was on the
27:22
market in real world people are not
27:25
asked to choose between all the better
27:26
the world all the diamonds in the world
27:27
if somehow the angel Gabriel came down
27:30
to a success you will now be forced to
27:32
choose forever and ever between all the
27:34
diamonds in the world here in forever
27:36
and all the button the world we might
27:38
very well pick all of that in the world
27:39
the point is we choose individual Ector
27:43
by or not for individual units loaves of
27:47
bread versus carats of diamonds and what
27:52
happened has happened is that the
27:54
supplier brad has been so expensive so
27:57
abundant that the value at any given
28:02
loaf on the other hand the supply of
28:07
diamonds is quite work like small small
28:09
and therefore the price of a value of
28:13
any given carat of diamonds very high
28:15
other words the yeah he can’t build with
28:20
consumption and
28:22
broad philosophical category have to
28:25
deal with them in terms of how much is
28:26
this thing valued the basis of their
28:29
given supply this is applies very
28:31
abundant if bread doesn’t say if Fred
28:33
had a certain a sudden red grout of
28:35
something if we can only get the bed
28:38
became extremely scarce we have to buy
28:41
you know a thousand dollars a loaf of
28:43
bread Doug it was he could easily get to
28:46
that point sometime so the point is that
28:49
the you always have to examine
28:52
relationship between the supply the
28:53
thing available in the demand for it so
28:59
that’s the that’s the language the
29:03
neoclassical against economist saw the
29:05
so-called value paradox and I say after
29:12
after a young team saw government but it
29:14
didn’t seem self-evident before the
29:16
1870s at least essentially more headache
29:19
and before this notice this whole
29:22
question was resolved and this whole
29:24
infinitely the Austrian other nail
29:26
classical especially the Austrian method
29:27
and analyzing economic problems in
29:30
general was this was this sort of method
29:33
of analyzing individual action I’ve kind
29:36
of the individual in real worl act and
29:38
contrast the quantity classical
29:40
economist weapon Ricardo etc who were
29:43
what ten the thing is tend to think in
29:46
broad aggregate categories of who’s
29:49
getting wages it was getting profits how
29:51
I was thinking allocated distributed so
29:53
forth and if you start with what I go to
29:56
get category that’s not building out
29:58
from billing walks from the individual
30:01
you get completely thrown eschewed the
30:04
whole analysis get messed up why not
30:07
with tremendous in inbred inherent
30:09
fallacies of argument okay makuu so we
30:18
want more or less most of the categories
30:21
wow we have production and consumption
30:25
land labor capital is also another thing
30:28
about crew sale is which is true by us
30:30
as well he’s a favor of achieving as
30:33
watch as quickly as possible or if you
30:35
want like the
30:35
a log cabin built today rather the next
30:38
week and the sooner as far as he’s
30:40
concerned the better those concepts the
30:43
basic concept of the human action which
30:44
is called time preference people trying
30:47
to achieve trying to achieve if they
30:48
have any goals at all they do and they
30:51
try to achieve these goals now rather
30:54
than later this is known a contrast of
30:57
the motto or we can say we can revise
30:59
the old model and say a bird in the hand
31:01
is always worth more than a burden of
31:03
Bush one vertebra Bush also the concept
31:10
of a psychic prophet who so is always
31:17
trying to benefit or any actually takes
31:19
which we try to do also Lisa and the
31:22
psychic sense in other words if he
31:27
quickly if you feel that he rather rest
31:29
for two hours and going chomp up chop
31:32
trees you’re doing it really feel the
31:34
need for leisure and so even he’s done
31:37
saying well this is my most profitable
31:39
action for like two hours and the sense
31:42
of psychic profit in the words like a
31:44
gainer hi a rising value scale if you
31:50
know if you don’t read the psychic
31:51
profit from your actions and your then
31:53
we’ll be reaping it’s like a loss it’s
31:55
up there going back to the movie choices
31:57
again if you choose you said wanna spend
32:02
like two three hours in movie a are you
32:05
doing it because you think I’m movie a
32:06
is a better movie than will be be able B
32:08
C or it’s a better way of spending your
32:10
time at some other way and if you go to
32:13
movie and you like it that you say okay
32:14
this is great this is a reap the psychic
32:17
profit from this this action the other
32:19
hand that’s the newly turns out to be a
32:21
big bomb then you say well it’s a total
32:25
planet really is a little waste of time
32:28
or rather sort of psychic loss in other
32:31
words you would rather gone you look at
32:33
it from plain sight you rather go on the
32:35
second movie B this is C and which is
32:38
whether then happens is you hope the
32:40
next time this director here makes
32:42
another movie you won’t go and see it so
32:44
that you learn from your experience
32:46
learning on the market feedback
32:50
relationship market so so the concept of
32:55
psychic prophetess liking by triangle
32:57
everybody is trying to gain us I keep
32:58
offering everybody’s trying to avoid
33:00
psychic losses and everything that it
33:01
does and another thing about roku sewing
33:06
us as the concept of uncertainty of the
33:09
world is always uncertain we never never
33:10
can predict the future totally and this
33:14
aspect of trying to anticipate future
33:16
trying to predict the trying to forecast
33:18
hoping you will succeed trying to return
33:22
all of the movies gonna be any good at
33:23
having pretty good idea hoping you’ll be
33:25
right this is the intrapreneurial aspect
33:27
of action other words the aspect of
33:29
meeting uncertainty of the future ok we
33:36
have kuso now and be free while analyzes
33:42
is actually we now bring in friday with
33:46
a picture and either you can have a
33:49
situation where who so is on one island
33:52
and quite another 10 and one of them
33:54
builds a rowboat i love it or one of
33:57
them is on one half the eye on the other
33:59
one the other half i talk like each
34:00
other you’re right you don’t have into a
34:02
personal contact the question is what
34:05
are they going to what’s going to happen
34:06
now basically an economically there are
34:11
two kinds of relationships that cannot
34:13
be hammered out to this be one is a
34:17
either puso will fly they can hit the
34:20
other guy over the head and steal his
34:22
accumulated and vast accumulate a horde
34:24
of the log cabin or whatever obviously
34:30
it’s not gonna be very much well you can
34:32
do that here in knocking over the head
34:34
or kill them or something this is the
34:36
hegemonic relationship fest it’s not
34:42
going to be to profitably at least
34:43
certainly this day exactly to probably
34:45
even for the diet doesn’t speech because
34:50
after he’s finally consumed me you
34:51
consume the fisher what I’ve earned you
34:57
really got to the point is not too much
34:58
better
34:59
when he wasn’t after you know where he
35:01
found the second guy and what he’s lost
35:03
is but fortunately that aggressively is
35:06
the possibility of a special division of
35:10
labor specialization relationship the
35:15
fortunately very fortunately for the
35:18
human race it turns as a specialization
35:22
of division Labor’s extremely more
35:24
productive for all people for this thing
35:27
fantastically more productive and such
35:29
any kind of self sufficient trying to
35:31
produce everything itself I just think
35:35
of rough just think of what what
35:37
happened we had a business over here
35:38
it’s all there aren’t people strangely
35:41
enough when I look up there like
35:42
sometimes I think there’s half size HL
35:45
Mencken others nobody everyone broke
35:47
under escalating Lee intelligence and
35:49
marketable exual because there’s still a
35:53
lot of intellectuals out there who not
35:55
only you say when a post-scarcity era
35:58
but also say that hmm we should go back
36:02
or go on or whatever tour to where your
36:04
regime your self sufficiency
36:07
specialization is evil and alienating a
36:09
division of one in division of labor or
36:11
so and therefore everybody should sort
36:13
of either do everything which is
36:16
essentially the marketing solution or
36:20
either do everything of somehow pressure
36:23
and Walmart’s put it I think that
36:25
everybody communist utopia with future
36:28
everybody else spent like an hour day at
36:30
the factory and another hour day the
36:31
field and other are they are writing and
36:33
so I’m rushing around with different
36:35
young the real little pod kind of sure
36:38
it took their and in that way developing
36:44
themselves all that facilities in every
36:46
direction the thing is that that’s sort
36:49
of development every direction would be
36:50
pretty limited I mean nobody is a to be
36:53
a great mathematician for example by
36:55
doing math like half hour a day before
36:57
you’re rushing off to the fields you
36:58
just not the way it’s done so clearly
37:01
the role of money collection
37:02
intellectual it almost gonna be out the
37:04
windows pretty clear but aside from that
37:07
I some the social algebra
37:09
that’s a bit early this economic aspect
37:11
that by smashing the vision of Labor
37:14
you’re really giving up most of the
37:17
production the human race the even even
37:26
if it was sociologically or culturally
37:28
or whatever beneficial horizontally by
37:31
official banner division labor everybody
37:33
should do everything most of us starting
37:37
this regime would buy out very very
37:38
quickly the present time the current
37:41
population level just thankfully ramp or
37:44
what we mean of joke Bernie’s your own
37:47
high five set trucks food clothing etc
37:53
that obviously well you have to reduce
37:55
down a very very low primitive level but
37:57
even there we mostly died at the entire
38:00
productivity modern world rests and
38:03
industrial system wrestling division of
38:05
labor okay so Chris on Friday happily
38:11
hopefully will realize this and they
38:13
start exchanging and on the basis each
38:16
one starts specializing even like and do
38:19
best or and or what happened to be the
38:22
closest visa what’s to happen other
38:24
words if whosales part of the island
38:26
there’s a lot of fish neither and if
38:28
he’s experienced fishermen up in the old
38:30
days he gives up all this acts a lot of
38:33
production she doesn’t like any way and
38:35
it starts specializing in the fish and
38:37
fighting might be in lumberjack bank
38:39
homely thoughts no he looks as kind of
38:41
chopping logs two of them then exchange
38:44
the logs for the fish both of them
38:47
getting more lives and more fish by far
38:49
than they could have gotten by trying to
38:51
be self-sufficient if this is true for
38:53
logs and fishing imagine how much is
38:54
true for high five sets etcetera etc the
39:04
also extremely important for them for
39:08
the development of the market and we
39:10
hear a lot about how the market economy
39:12
changing economies or the rule of the
39:14
jungle where the week of forced to the
39:16
work stuff like that actually just the
39:18
other way around for you really had a
39:19
situation where resources are very
39:22
the little hole when everybody zero me
39:24
on the river home exchange going on then
39:26
it really would be that way we could
39:29
force the one I would be it no there
39:32
isn’t and I think this situation where
39:34
they there’s no market possible that’s
39:39
really where the jungle was really
39:40
applying back fortunately Valley does
39:45
everybody participating the market
39:47
notice that everybody rather than that
39:49
but it turns out at even the sloppiest
39:52
of us even though we sped up them to
39:55
participate in the market and what
39:56
because it is arranged in such a way
39:58
that even the we may even errors in
40:01
particular crusade Friday situation
40:03
supposing Cruz I was better than friday
40:05
or friday development Crusoe at both
40:07
fishing and and the log coming so he’s
40:13
better on both and one might think let’s
40:15
say Crusades better on a friday in both
40:17
and there’s a possibility for friday to
40:18
participate there’s no possibility for
40:20
marquette to be set up because friday
40:22
has nothing to do in this situation
40:24
seems to be too inferior so to speak
40:26
it’s not true because it pays for crew
40:29
so it’s fitting eight times has bettered
40:33
a large shopper and only five times
40:34
there’s a fisherman it pays for him the
40:36
country on a long Chomp angry most best
40:38
at and allows and then by the logs from
40:42
Friday when he’s least fight eating
40:44
least bad act along a log chopping it
40:47
pays for him to do that is the level of
40:49
both incomes go up by doing that so this
40:56
is done this is david ricardo clean this
40:59
concept the world is called a law of
41:02
comparative advantage I was originally
41:05
applied by Ricardo to international
41:06
trade and it was only the Austrians
41:09
later on who fly this individual
41:11
exchange meaning that even if you’re a
41:15
poor country with very few resources and
41:17
you having that the not very wealthy and
41:19
separate separate I pastry pays for
41:21
other people with other nations to trade
41:23
with you because peace rather than the
41:26
cost rather than or by most best a hat
41:27
and trade with and buy the stuff where
41:30
you’ll at least worse that because
41:31
they’re better than better if this
41:33
example
41:34
spaces six times as productive as
41:37
Morocco and one area only twice as
41:40
productive tomorrow another area the
41:42
pace United States our country and what
41:43
had six times the productive at and buy
41:45
the stuff from Morocco you know as
41:47
tysons goes Morocco on producing the
41:48
beans or whatever happens the day so
41:52
this goes to part of advantage means
41:57
that the is really the sloppiest
41:59
personal shopping if nation on the
42:01
market with free market there was this
42:03
anybody is rough anybody to participate
42:06
it means instead of the week is going
42:08
under we just have a useful rail to
42:11
apply in the whole process so it’s
42:14
really exhilarating and happy thought
42:16
and yet somehow is I’ve heard of that
42:19
among the sociologists and lectures etc
42:29
okay we have come to Owen I steadily the
42:34
basis of em rocket set up the left part
42:40
of advantage and the whole exchange
42:41
system is that the natural a variety of
42:46
both individuals and resources though
42:47
the fact that every person is different
42:49
every other person has different
42:51
abilities tastes telligence cetera and
42:54
at every land area is different so that
42:58
one land area has fished the other line
43:00
area has a growing so on so on these two
43:03
things reviva conditions for this change
43:06
system okay we now come to the more
43:18
friendly embodiment of this is true live
43:23
in sanger more than michigan wants
43:25
utility etc we coming to lift famous
43:31
demand curve or supplying the man does
43:33
the basic concept really in economics it
43:38
used to be selling 19th century by
43:40
critics such critics of economics used
43:42
to say that if you could teacher powered
43:45
economics by simply
43:47
to say supplying the mass mind of man
43:49
and assess of a certain amount of truth
43:51
to that because those are the two basic
43:53
concepts in the fields a cocktail party
43:56
you can get ocular all these are
43:58
interested in economic these are very
43:59
doubtful get away with a lot by just
44:01
think supplying the man mr. teaching
44:04
occasions ok the the individual how much
44:12
the demand curve is how much the end
44:14
with individuals how much any given
44:16
individual by of any product any given
44:19
time and then at any given range of
44:23
prices the demand curve is based on the
44:29
rights and more the mission large
44:30
utility in other words that you might be
44:33
willing to pay I for example on the
44:35
chest prior are very very smooth ability
44:38
that’s my side I might be going to pay
44:41
thirty dollars for the fish chess set
44:44
but then for buying a second chest that
44:46
like from right then or something spare
44:49
chest that I’ve it might be more a five
44:51
arms and so forth so it then again
44:55
because of my supply of a product I have
44:58
a lesson but with a value my place on it
45:00
it’s fairly leather the place another
45:03
money i’d be willing to spend for work
45:04
and we read so from this on this machine
45:17
margin tility we get the truth that the
45:21
man the demand curve and lance scheduled
45:23
is finite in other words as the quantity
45:26
of the good increases on the pice for
45:30
well it’s probably good increases the
45:34
oxygen now should say the place falls
45:36
the quantity will manded the funding
45:39
purchase will increase and vice versa so
45:44
that if it’s for example i have to be a
45:48
great chess fan i might be willing to
45:50
spend thirty dollars on a chest up and
45:51
when you get to the point where it’s 100
45:53
hours I’m priced out of the market so to
45:56
speak the other has to get stand of five
45:58
all of those items by seconds
46:00
so we get a what some of the falling
46:03
demand curve is figure 1 price is always
46:10
on the y-axis some reason and quantities
46:16
on the x-axis so in this situation for
46:21
the individual for any given individual
46:22
a higher the price the lessons going to
46:25
pay less in the bio of it and lower the
46:28
price the Moors in the bottle but yeah
46:30
something like this there’s a falling a
46:32
man curve dee dee dee why you might ask
46:38
is the demand curve a straight line
46:40
what’s interesting interesting footnote
46:43
history of economic thought a long time
46:45
they duly demand curve the textbook
46:48
writers as a rectangular hyperbola on
46:52
the word for the area and Aneesa always
46:53
constant and they did it for many years
46:56
and then suddenly but I like in the mid
46:58
forties one economist said why are you
47:00
doing this there’s no evidence for it
47:02
though I was a tall one I have it a
47:04
straight line and stuff since then at
47:06
the macro believe that straight line and
47:07
their evidence for that either
47:10
it’s easier to do it that way what they
47:13
have to realize this i’m a standard
47:15
banana supply curves in a sense but the
47:16
one thing as will always be remembered
47:18
about them is we never know what they
47:20
are take the big problem economics texts
47:23
as the you cannot expect say the man
47:26
code was given here we given to the man
47:28
giving a course then you crank out the
47:29
answer try got production I got prices
47:32
that’s it it’s all seems like a very
47:34
mechanical things like you’re putting
47:36
money on slot you get the answer at the
47:39
thing is a real lights in the real
47:40
business world we don’t know that a man
47:42
could nobody knows of the matter nobody
47:44
knows the cross really either the whole
47:46
thing is a very uncertain kind of
47:48
picture you don’t star wallpaper given
47:50
the man code can given course card
47:51
because that’s truly even have to you
47:53
know we have to do is to take a course
47:54
and you can all make you can run the
47:55
whole industry of the whole country very
47:58
very simply so the problem is you know
48:02
where the economist got Yaga and then
48:04
were to walk the curves and I got its
48:07
got to the point now where the most the
48:10
people taking dynamics forces come away
48:12
from from the thinking you there sort of
48:14
30 great math courses a lot of tangency
48:17
zand who’s on the board so flat so on
48:21
and not knowing too much about what they
48:22
mean because the ends of the means of
48:25
become the engines and themselves
48:26
originally occurs it’s just a illustrate
48:29
and clarify for what happen was the foot
48:32
you gonna drop out and like who’s kept
48:36
on took on a life around okay so we have
48:43
canvassed the manor house supposedly any
48:46
given time you buy so much of this
48:49
product and price is lower you buy a lot
48:52
less buy more it’s obvious that if it’s
48:56
pretty obvious if if for some reason we
49:00
DS became a nickel a box that we want
49:02
their wheaties purchased for some reason
49:04
we these are all profound all the box or
49:05
a few people that real Wheaties fanatics
49:07
but by anything so it’s a fairly simple
49:11
against all your comments that’s kind of
49:13
insight all right this is the individual
49:18
demand curve then we just simply sum up
49:21
at least conceptually that’s simple
49:23
only know the individuals America
49:24
conceptually however if you want to know
49:27
if you want to at least conceptually how
49:29
many how much how many Wheaties we
49:31
brought is sort of a given place on the
49:34
whole market not just from one person
49:36
summed up over everybody then you some
49:38
abilities individual and ferb and the
49:40
one big not get the man curve which is
49:45
also falling it’s only for two reasons
49:48
one thing is the individual America
49:50
curves are falling so if each individual
49:52
may occur was point and some with some
49:55
will also be falling and secondly as you
49:58
keep cutting the price you tap new
49:59
people coming on the market at all in
50:01
other words i enter the chest market
50:04
most $25 let’s say other people enter
50:07
the chest marcos ten dollar so as you
50:09
keep lowering a price your people enter
50:12
from walking over the others as you do
50:13
this market of the minecraft keeps
50:16
getting flyer you keep fools even more
50:20
sharply you keep going so individual
50:25
demand curves of former market america
50:26
ruling this really is the end of the
50:30
individual may occur for all purposes
50:32
all right we’ve arrived at least
50:35
conceptually the market demand curve
50:36
essentially what it says is but the
50:39
market maker says it at any given time
50:40
i’ll always be freeze right now you know
50:43
as of this moment we freeze the country
50:46
like one of these free shots on the
50:47
movies and if the price then were such
50:51
and such is the price of weed eater i
50:53
found in all of how much money we need
50:54
to be bought fight for twenty dollars on
50:57
which will be bought separately suffer
50:58
if I swear nickel how much would be
50:59
bought we have your phone demand curve
51:04
obviously you don’t know what the shape
51:06
of the neck yoke I have the net curve is
51:08
you don’t know how much we’ve all you
51:10
know is it’s falling all you know only
51:11
we really know is theoretically the more
51:14
we purchase when we use or a nickel and
51:16
when we eat Wheaties then if we knees
51:18
were found all of the box and over the
51:21
attempts a lot of attempt supports the
51:22
measure of the man occurs they’re all
51:24
all nonsense I want to take up upon this
51:27
course that explain why not sighs but
51:29
the one of the they
51:31
rules of economic areas of other words
51:35
we have all the trees we have our
51:37
qualitative and quantitative as soon as
51:41
if anybody tells you about quantitative
51:43
laws watch act because there aren’t any
51:48
yeah okay we have the market demand
51:51
curve and then at any given time we have
51:54
a certain amount whatever it is
51:56
available certainly our supply supply
51:59
needing a number of n number of
52:02
homogeneous units whether there’s one
52:03
unit 20 units under 2 million or
52:06
whatever now this since it’s at any
52:09
given time since we’re freezing the
52:10
economy this moment that means a supply
52:13
line is always vertical like so s
52:16
invertible now this of course those
52:20
against is that those of you taking
52:21
economics courses before but you ain’t
52:24
you all know that supply curves was the
52:27
forward sloping but they’re really not
52:28
they’re really vertical because what
52:30
this what this is saying is that what
52:33
you have is you have a bunch of stuff
52:35
which is there how I came there when I
52:37
talking about yet that’s of course
52:38
important but not by this moment we have
52:41
a bunch of stuff whether it’s wheedies
52:43
hula hoops couple spoons doesn’t doesn’t
52:49
matter we have a bunch of a bunch of
52:51
units of absence of things available and
52:54
then we have people over home market
52:56
consumers in market evaluating them the
52:59
evaluations would be based on their
53:00
value scales whether it’s high in there
53:02
is Carol own advantage scale and event
53:05
in demand curve basically sand these
53:07
various scales is flowing like so and
53:10
while I would be vertical but that’s
53:12
what you’ve got you’ve got loss of what
53:15
the prices you have 100,000 boxes of
53:18
weeding and you can’t do much about at
53:19
least for this moment obviously no man 1
53:21
you can change the supply right now you
53:23
have some of so many spoons on somebody
53:25
weedy some so many hula hoops and that’s
53:28
it so you have your verticals of final
53:30
and you’re showing the man curve now let
53:39
this what this gives you was your and
53:43
your
53:44
action of these two is that the
53:46
intersection point between the following
53:49
demand curve in the vertical supply line
53:51
this year Zoe equilibrium point is a so
53:57
called a two-day or market equilibrium
53:59
price now the reason is called
54:02
equilibrium price this is the price at
54:05
which toe in which the place of this
54:07
product will tend to move and at which
54:10
will tend to stay if it’s this place
54:12
from it intent the remaining there roll
54:14
back to it other words the intersection
54:17
of the main current supply curve
54:19
intended attorney fights of the product
54:22
so one of the places we DS if I can
54:26
easily determine the man code for weed
54:28
ease of supply line of wheaties the
54:30
intersection point will be but when I
54:32
say ten I mean day to day I mean very
54:35
quickly okay why is that why what are
54:39
the forces that part of this the device
54:44
determining factor the okay let’s assume
54:50
from that that the price of this product
54:53
is higher than the equilibrium so called
54:55
equilibrium price that were equilibrium
54:57
force comes from physics and so forth
54:58
meaning that depending the remaining a
55:00
spoiler coming back to it that’s an
55:02
attempt again of economics at eight so
55:06
for Applied Sciences supposing and
55:10
supposing the price is higher than
55:12
equilibrium price the price is higher
55:16
this means of this effort this is ten
55:20
dollar the case whatever it is widgets
55:22
are Wheaties whatever and right now is
55:24
really love the 18 doll face at that
55:27
point supply the amount welfare for sale
55:32
by the widgets it leave there’s a lot
55:35
considerably greater than the mouth of
55:37
consumers will buy will the man sport
55:39
quantity demanded so what you have is
55:42
this gap here surplus right or trying to
55:48
700,000 weenies so if Fox is a weeding
55:50
is that however but this high price
55:52
because he was going only by
55:54
eighty thousand boxes because 20,000
55:56
left over something which businessmen
55:59
and sellers don’t like this is less
56:01
known as an unsold surplus can’t get rid
56:04
of it okay honey get rid of young son
56:11
was surprised well you start lowering
56:12
your price lower your place this is
56:15
named identify fine as if by magic the
56:17
simple things that disappear the place
56:20
is lowered learn more quantities are
56:23
purchased until finally the price is
56:25
lower down to the equilibrium point
56:28
where then young sell surplus is gone
56:31
and market as what is known is cleared
56:33
and where the quantity demanded is equal
56:36
to the quantity supplied at that price
56:38
up here the price of ugly will be a
56:42
point the fund a surprise raid only find
56:44
Amanda you have trouble has the unsold
56:47
surplus they’re putting on the other
56:52
hand that the price is below with my
56:55
equilibrium price say they’re here well
56:59
in this case we need them out clean five
57:04
cents a box in something like that at
57:07
that point well five cents a box only
57:11
have it whatever was 10 thousand boxes
57:13
of wiis supply for people trying to
57:15
trying to buy head an eighty thousand
57:16
boxes where is the Wheaties now what
57:19
happens is a big run weenies business
57:21
and as they went develop shortage make
57:24
sure the developed can’t find it the
57:25
stores anymore it’s for example a
57:28
government decree tomorrow the weenies
57:30
from now on can be so only two cents a
57:32
box you can bet my work take my word for
57:35
it we need to disappear from the shell
57:37
is very very quickly everybody leave is
57:39
rather would rush to get that this fog
57:41
entice for wii DS we need to be clean
57:43
out at the end of it the who nobody is
57:45
right wanna be producing restore to
57:46
sense the box okay the shortage develops
57:51
this is kind of response to this
57:53
shortage the fact that there’s more more
57:55
demanded and supply of active ice
57:57
without raising the prices they ran the
58:00
pipe they find of the gas eliminated and
58:03
i’m finally
58:05
place again the market is clear that
58:07
neither an unsold surplus nor a shortage
58:10
so who above it and any price above the
58:14
equilibrium place supply rather than the
58:17
man any place below it the man is
58:20
greater than supply and the equilibrium
58:24
price you have them rocket being cleared
58:26
for the exact balance between the man is
58:29
fine it means that the equilibrium price
58:35
whatever there’s enough people to buy
58:37
just enough people that buy whatever is
58:39
available or product just enough at that
58:42
price available for whatever people want
58:44
to buy so the market then have beautiful
58:47
built-in mechanism so to speak of
58:49
balancing the amount of air with the
58:52
math of people want to buy the product
58:56
and we will soon see what happens when
59:00
the in certain forces largely a
59:05
government try to interfere with this
59:08
process equilibrating beautiful
59:13
equilibrating mechanism so this is lee
59:17
this is the price of terminating
59:21
determining on market no well right this
59:27
is true and i think it’s unexceptionable
59:29
then how can i how can i price ever
59:32
chain have the price for you outside
59:34
here fix level enough supply of a little
59:38
supply online and we’re falling demand
59:40
curve in that case what prepares a place
59:42
to change obviously either one of two
59:45
things or both either the man changes or
59:48
supply changes I don’t mean so then if
59:50
we analyze any price or any price
59:54
changes any field you start looking for
59:57
these two facut what happening the mask
59:58
for it will have the supply of it so
60:03
well the demand can change for various
60:08
reasons the man can change for example
60:12
to
60:17
but King let’s say come now the Queen
60:20
comes out with a I like the I like a
60:23
certain brand of martini immediately
60:26
half the country rushes the Bible some
60:27
random ideas of ice the man skyrockets
60:31
serve but the brand of whiskey or vice
60:35
versa Jackie Onassis that Cree something
60:39
all those seen wearing some kind of
60:41
funny and everybody so I find that or
60:44
Michael thing drops out of fashion one
60:47
leaves another so man chain can change
60:49
for and does change for that reason
60:50
people but who would look for example
60:53
had a big league play few years ago the
60:57
big increase in the map of hula hoops
60:59
and that was a big collapse after about
61:01
a year year and a half of whom with
61:03
Romanian and the frisbee came in after
61:04
that so there’s a shift in the market
61:07
and fizzy market man could for hula
61:11
hoops went up and make her for frisbees
61:12
me Hoover’s went down hickory frisbees
61:14
went up that’s one thing that can change
61:17
it once of course the supply can change
61:21
while supply chain well it’s quite a
61:23
change again for various reasons one of
61:26
which can be response to the man see see
61:28
you later but one reason forces this say
61:32
he’s purely technological only in the
61:34
agriculture for example if there’s a big
61:38
Grouch week deployment damn for example
61:44
this figure 1 if the first thing is
61:55
being weak drought or let’s say one
61:57
yahoo travels a half a middle of west’s
62:00
has too much rain or too little rain out
62:01
of it as a big guy they drop any weak
62:04
weak to supply coming into the season
62:06
and I case the supply curve shifts to
62:08
the left the vertical supplying
62:09
languages this year with X million
62:12
bushels we now X minus whatever so this
62:17
Xena the old price your equilibrium
62:21
prices before this clear the market now
62:24
is doesn’t perform this design
62:26
turns out at the old price as I would be
62:31
a big shortage because enough week now
62:36
to satisfy the man at that particular
62:39
place so as other of that is because of
62:44
the shortage the price quickly goes up
62:46
and as it goes up the short is
62:47
eliminated and we wind up this new
62:50
intersection point or new equilibrium
62:51
point which again clears the market it
62:54
clears the market at a higher price of
62:56
course in order to again see to it that
63:00
just enough people to buy the amount of
63:04
lower amount week is available we now
63:08
have a lower quantity for a higher price
63:11
at the news of oil say that’s prime and
63:17
you can see that one of the functions of
63:20
the price system performs is a rationing
63:22
punk the fact that the place of
63:26
everything was free everybody would grab
63:28
it unlimited incidentally since we only
63:32
have an infinite supply of anything it
63:33
has to be a price more scarce the
63:36
product or more scarcity mana t a higher
63:39
the price sensitive thing the more
63:41
likely a nice people out get priced out
63:44
of the market people will have to drop
63:46
out of the market because of a higher
63:48
price of a marginal so called marginal
63:50
buyers and so as if I sell is the price
63:55
that was up the PI system performs of a
63:58
very important rationing function the
64:01
only other way of calling i’m actually a
64:03
functional soldiers would be for the
64:04
government of somebody to choose who we
64:07
get the product who wouldn’t plus the
64:09
leaders of the many different kinds of
64:11
problems at least if the other hand the
64:15
supply goes up those from s prime to s
64:18
example you thought it up at this point
64:20
and instead of a week drought as a big
64:23
increasingly production the client is
64:26
very good this season there is a much
64:27
better full eyes or use or whatever
64:29
better supply curve shifts
64:31
that’s fine I’ve shift to the right and
64:35
either the old price is now surplus
64:38
unsold separate people don’t want to buy
64:40
this new increased product of the old
64:42
place and so I schools and we have
64:46
rebeck down again to it a lower price in
64:50
order to induce people to buy the
64:52
increased amount so we have a supply
64:58
curves of supply lines moving up and
65:00
down given the man curves give it a
65:03
demand curve giving those tastes and
65:05
wants forfeit your product by the public
65:09
final and we’ll move up and down it in
65:11
other words the supplies there is the
65:15
price goes up and supply rises as go
65:17
down in order to if I shall go down or
65:22
do induce people will buy they increased
65:24
part the here is here we have they will
65:31
press 1 1 0 1 point which is always a
65:34
problem of the economics teachers and
65:36
students to suffer or what this point
65:37
the difference between ago when it
65:40
suppliers up and the main quantity
65:43
demanded increases important here
65:46
difference between that and changing the
65:48
whole demand curve I was a hold America
65:50
of increasing because who would observe
65:53
more fashionable rather than the Pacific
65:57
the whole demand curve increases that it
66:01
means that any living price will be
66:03
purchased them before and it’s a
66:07
completely different concept of course
66:08
and going up and down the given the man
66:11
curve the usually in economics is a
66:15
shorthand if you say there’s an increase
66:18
of the man what’s men’s whole demand
66:20
curve shifts up or with any given price
66:22
more will be purchased already i think
66:28
we’re beginning to see something she’ll
66:30
be able to see something we’re not gonna
66:34
get to the money question till much
66:35
later course by already should begin to
66:39
see what can cause or in prices to go up
66:41
I mean we can’t win a point now for some
66:43
solar inflation
66:45
one can pour the situation almost every
66:46
price is going up some course more than
66:48
others either because the supply
66:50
everything is rapidly going down which
66:53
is obviously not true and suppliers of
66:57
goods is more or less about what is now
67:00
is increasing each year something not
67:03
going down every all because of the
67:05
Lance everything is going up but if the
67:08
Lancer everything is going up and we 20
67:10
in terms of consumers a certain given
67:12
income the tumors can ship their
67:15
purchases say from hula hoops to
67:17
frisbees which case of the manager who
67:20
hoops go down and a frisbee he goes up
67:22
how can advance for Beijing whose answer
67:24
is bees go up reading any of my phone I
67:26
can’t happen any up with the consumers
67:29
are getting a certain income I can
67:31
answer everything I love where’s that
67:32
where’s the magic source in which the
67:34
money is flowing so they going to
67:36
increase all that a man curves this
67:38
course is the sixty-four dollar which
67:41
would be four thousand dollar question
67:43
if the skip ahead of that as a teaser
67:46
like man curves could only go all grow
67:49
up if somewhere some somewhere now in
67:51
the basement somebody’s printing a lot
67:52
of money quotes shoveling a mat onto a
67:56
public so everybody thinks they’re
67:58
better off and spending happily spending
68:01
this new money was Nicole’s prices would
68:02
go up and that’s that’s that’s just a
68:06
teaser for later ya thank ya that’s
68:16
first lecture

Leave a Reply

Your email address will not be published. Required fields are marked *