0315 micro
time zone difference uh i may send uh i d i do send uh uh some recorded videos by request by students but i i don't think it's quite convenient to send this kind of emails one by one right so maybe i will send the recorded videos to our class representatives after the lectures each week and she will help me to upload the recording videos to google cloud the reason and sends a link to our chat which group the reason is because i cannot access to google's so our class representatives she can help me to do that okay so and is that okay okay and uh please send me the send me your emails after the lectures okay send me your emails after lectures and the other thing is um uh if you you cannot access uh attend the online lectures tell me the reasons and uh okay i will i will make adjustments like you know you can attending the lectures online so okay uh sorry you can attending the lectures just like you know offline by using the recording videos uh but yes that's the only thing i can do about it and i think last time we did finish chapter one and talk a little bit about chapter two and uh for today's plans we were going to finish these chapters hopefully and uh as i said if you guys have any questions concerns please let me know okay uh like you know i i uh i'm fully encouraging students who involving in the lectures like you know share your knowledge share your ideas okay so last time we talked about thinking like economists as i said like you know each field of the studies has its own terminologies for examples in economics we have a demand supply elasticities consumer surplus etc right we were going to talk about these terms in details in the later lectures okay and uh last time we also mentioned like you know being training as an economist you need to think in terms of alternatives right so also like you know values uh cost double individual and social choices the reason is because other individual and the policy maker of the society their objective is different so they have a different cost right for each single event and also we need to understand how certain events and issues are related okay as i said last time we kind of really focus or emphasize the causality not only correlations they are different right so you need to distinguish those two events are causal relation not simply correlated they are different okay so as i said the last times a to b a event a and event b a cos b that's called causalities a and b those two events may be correlated but they are not causalities they are different and we need to distinguish those two and for economists we need to find out causal relationship the reason is because as i said we need to give the policy makers some suggestions right we need giving the policy makers some suggestions uh did you guys remember last time i give the examples right wearing a wrinkle and ringing outside those two events are quali correlated right but not causalities right the policy makers if if you're abandoning those people to wearing a ring coat it will not cause stop raining outside right it will not cause stop raining outside right so therefore wearing a ring coat does not necessarily causing raining outside so therefore stop wearing a ring code policy is useless to stop reading outside right so this is kind of examples right so this kind of policy is invalid policies okay and last time i think we also talked about you know use abstract model to help explain how how a complex and the real world operates okay and the developer series collect data analyze data evaluate the series so this is kind of how economy thinking right so the reason is because we need to fully we need to observe the realities well we need to observe the real world and trying to understand the real world how to understand the real world we are trying to use a abstract model to explain how the real world operates okay for example we observe the realities china produce use and thailand produce rice why different countries produce different products right can you guys explain why why different countries produce different products this is what we observe right especially some small countries right they are not producing everything right because they have limited results due to the scarcity so they can only put and produce the service or the certain product that um to maximize their profit exactly the resource is scarce right and the other student said because they produce what they are best at so as those they produce was they based on age right exactly so each countries each individual has its own strengths right okay we just focus what we relatively good at as i said in the first chapters your mom is good at cooking your mom is good at doing the laundry your mom is doing good at washing dishes but you cannot only rely on your mom to do every housework the reason is because your mom also has a limitations right he he has a constraint what kind of constraint the limited amount of times for a nation as well like you know our labor labor uh labor force is limited right our resource is limited so therefore like you know we we want to focus or we want to specialize what we do best right relatively good at so therefore therefore our total output will be maximized so we are using this kind of model to explain how the real world operates right and then we collect and analyze the data to evaluate this series right and the last time i do i do talk about uh you know where to collect the data right so we are we have a two main main main string of the data right so one is from primary right what is a primary data stands for the primary data is the data we are collecting and so also the data what we are using right and the secondary data is the data is other institutions or other companies collecting and and we are borrow the data from the others and we are using those data that's called the secondary data right so did you guys still remember okay and you guys still remembers for the primary data for the primary datas uh could you propose some examples what can be considered other primary datas what kind of data can be considered as a primary data survey exactly survey right experiment survey right so survey data okay so i think most of the students are quite familiar with survey data right so you read some questions and you spread those questions to each individuals and collect the data from those individuals right so did you guys think uh have have ever think about what is a challenge by using this kandao for method maybe it's not that sentence certain specific enough not like interview you can straight away you know talk to the others one by one but through surveys um something like you already you already unset at end for them to just make a choice but not to hear exactly from them exactly and the other students say some question can lead people to answer in a certain way exactly those are leading questions right and it could also be bias the reason is because it's quite difficult to evaluate the accuracy of the answers right some some of the respondents they just you know simply answer your question but they didn't do it carefully right and uh we cannot evaluate their answers right so also like you know sometimes our survey questions can uh it's quite difficult to distribute randomly what do you mean randomly the random means uh sometimes we only distribute the questions to certain group of the persons for example if you distribute your survey question by your witcher moment right if you only distribute your your survey questions online for those students for those people who cannot access online they cannot respond to your questions right and sometimes you only dispute your survey questions among your friends right among your classmates it's teachers so therefore your question your your examples cannot consider as a random samples so therefore yes exactly right and uh and also like you know this student says the question can be leading questions and uh sometimes like you know the sample size is small right you only collect a few examples from from your experiment so therefore therefore it's those are the limitations for the service and you need to curious about that the reason is because some of the students some of the students they only they only they only know how to collect the data but they they they they just ignore the quality of the data sometimes sometimes with biased raw data with the bias the raw data no matter what kind of methodology you are applying your results will be biased right so you need to really really focus or care about this kind of issues at the beginning right check the quality of the law data once it has a biased okay or once it's not that accurate you need to fix it okay you need to fix it exactly you need to have a certain quantity with a high quality exactly thank you certain amount of the quantity of the observations with high qualities okay any questions so far any questions so far okay so for the primaries so survey second day is experiment so sometimes we can collect the data by experiment for examples for example we have a two group of the patients one group of the person uh patients giving the medicines the other group how the patients are just giving uh waters okay therefore like you know we want to check out so the effectiveness of the medicines right okay so therefore like you know we want to find out how many of the patients is fully covered by using such a medicines right so therefore we can get get a data from this kind of experiment right and also the last part is observations right so for examples for today's lectures i can check right oh there are 71 students attending online right and how many other students absence for my lectures right and how many students are females and how many students are males right how many students are from korean how many students are from thailand right so therefore this is based on the observations okay belonging to the primary data those are the three major methods okay and for the secondary datas for the secondary data okay so as i said the last times we have a different ways to collect the secondary data for examples you can you can get those secondary data from world bank world bank imf okay okay those are the free websites right and the free agency to offer tons of other high quality data also you our school also purchased some like your database for example investment data and the merge and acquisition data okay for the firm level okay for the firm level data okay and we did spend a lot of money to hold these datas okay to hold these data and uh obviously you can find the data from the magazines okay from the books etchers right so those are the mainly sources for the secondary data okay so basically when yes exactly bloomberg's folks exactly yes so those are the data collected by the other agency and you are using for the research right you are using for the research okay or for your project your company usually use the secondary data they want to save the cost it's it's all depends like on what kind of research you are doing right it all depends what kind of research you are doing some of the research you have to rely on the primary data the reason is because none of the other companies collect relevant data for you for your research right so you have to do it by yourself but some of the research you can follow the data from the other agencies okay and the kind of save the cost okay exactly yeah right and uh for the students normally we are using the secondary date as a reason is because we don't have a sufficient money and the sufficient time right to collect the data by ourself right and as i said for the survey methods they are we we are facing a quite a challenge right and the difficulties so it's not that easy to collect the data by ourselves okay any questions so far any questions okay if not let's go on okay let's go okay so here is uh here is the examples okay here is the examples how economist thinks okay so first we are trying to we are trying to explain okay we are trying to explain how the inflation works okay so we are trying to we are observing like you know government printed a lot of money right so therefore we're observing the inflation in this market right this is exactly happens right now right this is exactly happens right now spreading most part of the world okay okay and uh our our money is kind of uh value less right our money is kind of value less at this moment right we are observing this kind of phenomenon right from the market so therefore what we are doing to evaluate this kind of you know series so first we observing rep increase in price second is we are writing a model called the theory of inflation right and then we are trying to test this kind of series right what we're trying to test okay whether this kind of theory is a valid or not right and then we are collecting the data money glows and inflations if they are highly correlated or not right if they are highly correlated okay then we can verify this is a good models or valid series otherwise like you know we are kind of adjust make adjustments right make an adjustment about this theory of or or models right this is how how like you know economist economist thinks first observation then writes models then use the data no matter whether it's a secondary data or primary data and once this once we're using the real-life data's real-life data and check or test the the valid of this model or series then we'll just stop here the reason is because this is a good series otherwise we need to adjust okay adjust the model or adjust the series then use the same data to check it again okay so this is how how we uh be this is how being as an economist how being being as an economist how we are thinking like you know the realities first like you know observing then right models then collect the data and test the valid out the data okay so what's next okay what's next this is quite crucial as economists in each of economics models we cannot okay we cannot avoid making assumptions we cannot avoid making assumptions and we are trying to make a proper assumptions in each of the models so can any of you guys tell me why we need assumptions for each of the economic models okay any of you guys tell me why in each of the economics models we need assumptions maybe to find out more possibilities and you know to extend the answers for all of us in the society to have a bad understanding to better understand the consumer business behavior when making an economic decision try to figure out what happens when my happens so we know what we observe what to observe close but not accurate not that accurate so we are trying to we are trying to make different assumptions in each of the models and we each of the economic model we do have assumptions we cannot avoiding making assumptions the reason is because the reason is because the real world is uh so complicated human being is so complicated right are you guys agree so we're just trying to make the thing easier and simple we are trying to make the thing easier and simple otherwise it's quite difficult to write mathematical models and describing the complicated real world it's impossible right for examples in in the basic microeconomics models where assume each individual is rational right we assume each individual is rational are you guys agree are you guys agree yes while we make each individual is rational the reason is because if people are irrational or semi-rational yes if people are irrational or semi-rational we cannot say the firm's objective is the profit maximization right so the firm's objective is profit maximization is only according to the policy maker for the firms or the manager is a rational person right otherwise his objective may not be profit maximization right but for the real world is not be always that case sometimes we behave semi-rational sometimes we behave irrational right can you propose examples under which conditions we may behave semi-rational so can can you guys propose the examples as i said for the real world like you know not everyone is not everyone is rational right for example let me give you guys examples and you guys can propose more for example for uh you know in china we have a shopping festival called double 11 and in the western countries you guys have a black friday right so most of the good are on sale at their times right and some of the people purchase a lot and then they regret once they get those kind of commodities sell the commodities the reason is because they found they spent too much so too much money right too much money during those kind of shopping festivals right so therefore their purchasing behavior is semi-rational or irrational at that time right so for the rational persons they they kind of purchasing the commodity of goods right upon their budget right but sometimes we just kind of purchase the goods beyond our budget right so therefore we behave semi-rational or irrational during this kind of shopping festivals right so it's not always that case but as i said for the simplicity we all assume people are rational right in most of the economic models right exactly gambling right right try luck yes you are right like you know sometimes we we know like you know if we we gamble in the casino we may like you know lose money right with high probabilities however we still do that right so it's kind of ill semi-rational right or sometimes irrational right if you're gambling in the casinos right you're right right for the rational persons you may avoid gambling right but uh some but uh sometimes like you know people like allowed to do that right yes there are kinds uh there are tons of the different examples for this kind of you know for these kind of areas right uh there's already three keys on the tables but you believe that next will be another case you bet for it exactly is exactly exactly yes yes for the rational persons right you are like you know you are calculating the results by you know with the probabilities right but um but for some irrational person or semi-rational person they are just trying to push their luck right and uh here is another examples like you know for our economic model in the international trade this model called the ricardian models this model is called the ricardian model these guys discover these models back to 100 years ago okay so he as i said he just observing like you know different country producing different products right so he make assumptions he assumed in the real world we only have two countries and two goods okay obviously this kind of assumption is in relation in realistic right so the reason is because in the real world we have uh over 200 countries and a billion of the different products obviously this is not true right so if you make a such unrealistic assumptions right but why this kind of assumption is good the reason is because it makes things much simpler or easier okay so it makes the real world easier to understand for us the reason is because suppose we only assume china and the thailand right so the real world only have a two countries and thailand china produce use and thailand produce rice right so mechanism is the mechanism why each countries has incentive to trade the reason is because different country has its different strengths okay china is relatively good at making shoes comparing to thailand and thailand is relatively good at making rice comparing to china so both countries have incentive to trade when they are allocate most of their resource in the in those sectors which they are relatively good at so that's why making such assumption makes the things much easier right if you are listing over 200 countries and listing billions of different products this kind of easy models cannot be explained okay all right so you cannot easily convince the persons how it works okay so that's why we need to make assumptions in each of the economic models and use a different model assumptions to different models use a different assumption to different models trying to answer different questions any questions so far any questions so far guys professor can i can i interpret the regarding model that you mentioned just now as a wishful vision for the international trading yes sure okay okay yeah so so you want to explain right so i cannot hear you properly um yeah i mean yeah i can i understand the ricardian model that you just just mentioned as a only a wishful you know expectation for the international trading but it's not uh it's impossible to you know to operate in the real world um actually like you know why we are proposing uh why we are proposing this kind of ricardian model the reason is because we are we are we are observing this kind of phenomenon in the realities while we are just using this kind of simple models uh simple assumptions uh a simple assumption as a two country and the two goods we are trying to explain all the country the mechanisms those countries are just focused what they are relatively good at and then with these kind of simple models we can understand them we can extend it to three countries to four countries so therefore if we can extend to over 200 countries and extend the good to over uh two billions of different type of goods this kind of mechanism it still holds so that's why like you know we need to make assumptions even though it sounds unrealistic is this clear enough okay okay so we're trying to make a sometimes this kind of assumption sounds unrealistic but uh you know it's make the real world easier to understand then we can extend the models right and see whether it still holds right see whether it still holds we are relaxing these kind of models we found okay it still holds so therefore like you know uh therefore people are kind of understand the basic mechanism okay upon the complicated real world okay got it okay good any other questions thank you any other questions guys okay okay so then we are going to uh introduce two of the most basic economic models the first one is called circular flow diagrams the second is called production possibility frontiers those are the simple models and the first one is the video models okay so so the video model is like you know we are just simply draw the diagrams okay not many economic model is a video models okay this is one of you like you know video models okay okay in economics okay where we are trying to show how the dollar flows in the market okay so here we have assumptions what kind of assumption we are imposing so we are assuming in the market we only have a household and firms obviously this is not fit for the realities in our real life the things are much more for examples we have a government like you know as i said most of the times governments just let the market runs right so we don't have any government interventions however sometimes we have a government to intervene the market right especially at these times right right so for example if the government from the oil price get too high right so we may need god give some subsidies to the gasoline to to the gasoline companies right and uh sometimes we the government uh found like you know the polluted company produce too many outputs right so they may levy high tax rates for those polluted companies right to induce them to produce less right so etc so in this market we ignore government the reason is because we want to find out without government interventions how the money flows so then with these simple models like you know if we understand how the dollar flows in these models we can add the government into the models eventually right so first we are trying to like you know introduce the most basic ones then like you know in recent like you know circular flow diagrams we do have the models with the government okay so but for the basic ones we don't have it okay let's take a look at this in details okay we let's take a look at this in details so with these models you guys can see you guys can see like you know we have a two market we have a two market the first one is the market for good and service the second one is markets for factors of productions okay and we also have a two parties the first one is firms the second one is a household so therefore with a two market and two parties then you can see how the dollar flows and how the input and output flows so so which arrows represent dollar flows the green arrows represent the dollar flows so let's take a look at this model in details okay so first household so household buy and consume good and service from what one good and service market right okay so household buy and consume good and service from this market market for good and service right so government uh household spending money in this market right so when the household spending the money in this market firms get revenues right firms get revenues right firm sales and produce the good and service in this market and get those revenues right so once how the firms produce and sell the goods service what kind of inputs the firms need to use right so firms firms pay the wages and the range and the profit in the market for ma in the market for fractals productions right so firm hierarchy labors firm renter land right firm giving profit to the capitals right who owns those kind of resource households household on the land household supplies labor household has capitals so one's firm giving wages rent and the profits household got incomes so with these incomes household spending in the market for good and service and the firm gets revenue and therefore once firm gets a revenue firm can pay the wages rent and profit to the household this is the circle for the dollars right this is a circular froze for the dollars right these green arrows represent how the dollar flows okay so the firms firms purchase land labor and the capitals with wage rent and the profits and to produce good and service and sell those goods service in the market for the good and service market right and the household purchase those good and service among this market and you know with uh with their income with their income any questions so far any questions so far this is the first circle right this green circles is a house represents how the flow of the dollars any question so far guys okay and then we also have the second circles is this uh orange circles called the flow of the input and output so firm sale good and service firm sale good and service and the household buy guden service household offers land and capitals and labors and firms use factor productions to produce good and service okay so here i should emphasize one point input what kind of input we are using to produce land labor's capital those are the main sources to produce good and service not money we are not using money to produce you cannot use us dollars to produce shoes but if you need produce use you need laborers land and capitals okay so money is not input to produce good and service labor land and capital are essential to producing good and service okay so with these uh orange circles we have a flow of the input and output with this uh green circles you you will find the flow of the dollars so this model called circular flow diagrams circular flow diagrams any questions so this model just represents how the dollar flows okay in the market okay how it works so as i said this is the most basic models right this is the most basic model the reason is because in this model it doesn't involving any government interventions right and obviously it's not that fit for the realities however it's a it's provide us a basic ideas how the dollar flows in the in the real market right okay if you guys don't have any question or concerns let's take a 10 minutes break and we will continue after 10 minutes okay let's have a break okay okay let's back to our lectures so in the previous lectures we just illustrate like you know how the money flows in a market right so we have a flow of the dollars and the flow of input and output right so with these models it just shows us how the dollar flows in a real market as i said like you know firms produce and sell goods and service and also firms hires and use factor productions for the household buy good and service so firms sells good and service household buy good and service and the firm's hires and the use effect of the productions and household actually owns and sells okay factor production in this case house firm buy and the household sales fat all the productions so firms and households they operate up opposite okay in this case the operator opposite in this case and for the market for good and service in this market firm sales and household buy in this market market for fact of the productions household sales and firms buy okay all i say is factor productions basically we have a land labors and capitals not money we are not using money to produce shoes we are not using money to produce rice we are using land labor and capital to produce use rice computers etc okay and the second model i want to introduce is called the production possibility from tears okay so what is this model really means okay so this is a graph shows a combination of output that economy can possibly produce giving limited factored productions and limited technologies so what is the constraint we are facing we are facing the resource constraint and technology constraint but we want to produce maximum maximum amount of goods okay so we want to maximum the maximum amount of goods upon the limited resource and technologies so here is the examples here is the examples so suppose suppose in this case supposed suppose in this case we assume labor is a only input the productions okay and here for the simplicities we assume the output has have only two different type of goods the first type is a computers the second one is cars okay so let me ask you guys a questions if i impose all of my resource to produce computers how many computers i can produce in this case if i imposing all of my resource into computer sectors how many computers i can produce it's easy right so if i'm imposing all the resource in the computer sectors i will produce 3000 computers and zero cars right if i'm imposing all my resource to produce cars how many cars will be produced 1000 right 1 000 right so this is the represents three thousand zero right this is the represents one thousand zero right so if you want if you really like computers i will involve i will devoting more all of my resource to producing computers if i prefer cars i will involve in all of my resource in the conceptors and producing zero computers however as a as a rational persons we may prefer both type of goods right so therefore maybe you are going to choose at bone b one b so as this one has this point you're going to produce 2 000 computers and 700 cars obviously obviously along these blue lines you have a infinite number of the choices right you have an infinite number of the choices for examples con a so at point a you can get 2200 computers and 600 cars okay so can any of you guys tell me what's a major difference between those two points point a and point b what is the major difference between those two what is the major difference between those two points quantity also produce the cars quantities one produce more cars one produce more computers right are they efficient for both of them we produce more cars than a b produce more computer than when the quantity of the computer is increased the quantity of the cars decrease right so this is the kind of trade-off right did you guys remember the reason is because we have a limited resource and limited uh technologies right so therefore upon these limitations both a and b is the best we can do so this blue curve called a production possibility frontier it's called the production possibility frontier so along this curve this is the highest amount of output we can produce the major difference for a and b is their preference for those people who prefer more computers you choose a for those people who prefer more cars you choose b okay most also both of them are efficient as i said this those points are the best we can do along the along this curve all the points are the best we can derive that's called production possibility frontiers okay how about c and the d we have a point c and the point d so point d compared to point a which one is superior point d and the point a which one is superior d is inefficient why point a is better than point d exactly you got the point you got the point sorry you got the point point a is superior than point d the major reason is because quantity doesn't fully utilize its resource you know if i fully use like a utilize my resource i can obtain six units of cars and the 2200 unit of the computers however at point d i can only produce 10 000 cars and 10 000 computers and three thousand cars obviously both outputs are less right with point d comparing to point a so zero four so zero for point a is better than point d right so point d is inefficient in this case how about point c due to the limit limited resource c is cut c c e c for current capabilities of production is unreachable exactly see c is unreachable right c is unreachable and the c is a better off than a b d right c is a better off than a b d however it's a mission impossible the reason is because it's beyond our capabilities right it's beyond our capabilities it's a mission impossible so the best we can do is along this production possibility frontiers right this shaded area is inside of this frontier is a inferior side right so inside of this production possibility from here is inferior then along this curve right so therefore this diagram is just elastic we can choose any point along this production possibility frontiers right all those dots are efficient all those dots are efficient within this production facility possibility frontier all the points are inefficient the reason is because they are not fully utilize their resource but uh above the production possibility from tears all the dots are impossible the reason is because it's beyond its capabilities any questions any questions okay so then i will wrap up this point efficiency point a and point b are efficient but not point b right and the trade-off if point a if you want moving from point a to point b you have to give up 200 computers in order you have to give up 200 computers in order to get a 100 additional cars so therefore the opportunity cost to get each car is a two computers right the reason is because as i said at point a if you want to move from point a to point b the opportunity cost is you sacrifice 200 computers in order to get additional 100 cars right so the ratio is a 200 divided by 100 which is equal to 2 right so you if you want additional one cars you need to sacrifice two computers right so that's why the opportunity cost for each car is two computers right if you really like cars you are going to you are moving to these directions right if you really like computers you're moving in these directions right it's all depends on your preference right but as i said along these production possibility frontiers all those points are efficient right and those two points are the extreme case at this point you are only producing computers at this point you are only producing cards and let me ask you guys a question let me ask you guys questions so at this point you are sacrificed two computers in order to get one unit of the car cars right but at this point obviously you are going to sacrifice more than two more than two computers in order to get one unit of the cars what is the economic intuition behind it what is the economic your import in inclusive regardless the reason is because you can see the tangent line is getting more and more steeper so therefore at this point is a two computers get one cars at this point is more than two right in order to get the additional unit of the cars what is the economic inclusion behind it why we need to sacrifice more and more computers in order to get the same unit of the cars if we are moving to these directions if we are moving to these directions if we are moving to these directions any questions any anyone have some ideas of who is the volunteers to answer these questions because producing a computers need less resource than cars limit strength of the labors the car production is belong its maximum amount not exactly the maximum amount of the car is 1000 right right so as i said like you know at point a we need to sacrifice two cars in a two computer in order to get one cars but when we're moving along these directions we need to sacrifice more and more cars maybe the revenue is almost same opportunity cost close margins very close opportunity cost why opportunity cost is increasing for additional unit of the cars why the opportunity cost is increasing because the cost of making cars is more expensive than making computers uh obviously we know like you know making cars is more expensive than making computers so that's why at point a we need the two computers to get one cars but my question is at points for example at point e we need more than two computers to get one course why them there may be a high demand for certain products it's nothing to do with the demand here we are only focused on the production side so it's a supply slide so we are not dealing with the demands at this moment the reason is because the reason is because you can see because of because a car requires more parts uh yes you are right but uh you know at point a the car also requires more parts right it doesn't change these parts right so you know my question is at point a we need the two computers to to switch to one cars but for point e we need more than two computers the reason is because at points a we have a less cars at point e we have a more cars right so once you are producing more and more cars it's much more difficult to actually making additional units of the cars the reason is because you are close to your capacity right you are closing to your capacity so it's a really difficult making additional unit of the cars so you need to put a lot of effort so that's why you need sacrificing more computers for examples for examples if your if your micro economy is great if your microeconomics great if your micro economics grade is a 50 80 and and if you spend one hours each days your grade can be 85 so five actual five actual points and if your micro economics grade is 95 and you want to make your micro economic grade 100 points you mean full marks so you may need to spend 100 hours the reason is because you reach your capacity right you almost reach your capacity so this is also five points but it's really difficult to get these five points the reason is because you almost you know reach your capacity same here right point a point a is far away from your capacity you only need two computers to get additional unit of the car but point e is close to your capacity so it's really hard to make additional units of the cars you need to sacrifice a lot of computers otherwise you cannot get additional units of the cars so that's the difference so here is like you know got it is this clear enough yes it's clear but professor can provide one more example we need to know more about it okay okay so here is like you know as i said like you know your your your grades right your grades like you know 80 to 50 85 you know five points you need you may spend an extra hour each days and uh you know uh 95 to 100 you need may spend the actual 10 hours each days right and also like you know recently uh recently we have olympic games right so like you know for example the racings right so the reasons like you know so if you are 100 if you are racing for 100 meters like you know you you spend 13 seconds so from 13 seconds to 12 seconds like you know only one second difference right you may spend the hours one hours per day right but for 12 seconds to 11 seconds also one second right you need to spend more than 10 hours per day for like you know practice so that's a big difference for 11 seconds to 10 seconds it's it's really difficult but the further like you know for the 10 seconds to 9.58 this is one record right so like oh no it's a mission impossible right so you know you need to be a talented ones but also very hard working persons right so the reason is because it's uh almost close to your limitations humans beings limitations right so and uh for the one point nine point five eight to nine point five seven like you know only 0.01 seconds but you know it may takes you four hours right right right it may takes you four hours right so the reason is because it's close your limitation so you need to factorize a lot of the resource energy labor force etc in order to increase this 0.01 got it same case here right same case here here is like an only two computers but here's here's way more computers same same reasons any questions is this clear enough guys you guys may propose more like you know good example as well like you know but my point is uh why the opportunity cost is different along this production possibility frontier the reason is because the reason is because the reason is because at each point like you know we need a different level of the resource to produce the same level of the output right it depends whether we are close to the limitation or not right so that's why okay so this production possibility frontiers looks easy but there there is some economic inclusion behind it right there is the economic intuition behind it okay so let's take a look at this diagram again okay so this is the first point a we are going to produce 2200 computers and 600 cars okay then there is a shift okay there is a shift we are shifting this blue curve to this brown one okay so what kind of events it may happening what kind of events it may happening so this blue curve shift to this wrong one can you explain more labels more capitals no more operating hours no computer production increase not necessary efficient not really so right now you can see right so initially if i'm allocate exactly technology improvement in what technology improvement in exactly technology improvement in computer sectors right so initially i if i'm involving all of my resource in producing computers i'm producing 3000 computers right but right now if i put all the same resource in the computer sectors i can produce 4 000 instead same resource why i can say guarantee same resource the reason is because the total output for the car sector is a constant right so therefore the only thing changed is a technology level for the computer sectors you guys agree so initially if i allocate all of my resource in the computer sectors 3 000 computers but right now i can produce 4 000 computers but initially i'm producing 1000 cars but right now i still producing 1000 cars so the for the car productions same resource same technology levels but for the computer sectors same resource with a higher level of technologies okay so therefore you can see i can choose g ink stand out for a obviously g is uh superior than point a right so my question is right now the technology improvement is in computer sectors why i can consume more computers and cars why the technology is improving in the computer sectors why i can consume more cars that's my question efficiency why if this is can you explain a little bit details efficiency of times and the resource computer production require less resource therefore we can spend more on cars exactly you got the point actually like you know right now the production uh the technology level in the computer sector increase therefore when we we don't we don't need uh so much resource and the labor force in the computer sectors we actually save these labor's force and resource into the production of the cars right so therefore we save this kind of resource in the initially applied in the computer sectors they move this kind of resource or labor force to the other sectors which is the car sectors so therefore even though the technology improvement in only in the computer sectors but we can use or produce more computers as well as cars everyone got my point that's economic inclusions that's economic inclusions as i said the total amount of labor force and the labor resource is limited so one sector use less therefore you can save those labor force to the other sectors okay okay let me let me give a uh let me give you guys um more examples from the real life you and help you guys to understand this diagram better okay so for example you know uh china china starts its economic revolutions or reform back to 40 years ago okay so back to 40 years ago to centralize the economy to a market economies okay so back to that times back to that times we have a we have 0.8 billions farmers back to their times we have a 0.8 billion farmers but right now even though the population grows during those past 40 years our number of the farmers decreased from from 0.8 billions okay
only 0.3 billions roughly so why so the number of the farmers jobs from 0.8 to 0.3 roughly okay so this is called missing farmers right where those farmers go where those farmers go smart farm technologies can you explain it in a little bit details industrializations replaced by technologies change to technologies can any of you guys explain this in a bit more details so by using these diagrams maybe 0.3 billion farmers for currents china is somehow already meet is equilibration or saturation so and and due to the improved improving in technology for farming we don't need that much of farmers like um 0.8 billions before maybe because yeah we can spread the labor to another industry exactly exactly like you know this is actually happening like back to uh during those past 40 years like you know once china starts its economic reforms like you know we actually save this 0.5 billion farmers to work they move to the cities that's called the urbanizations right
like you know they are moving to the rural areas to the cities okay so chinese chinese farmers chinese farmers why they become they why they become the food delivers food deliveries why they become to the witches why they become to the workers in the in the factories the reason is because we don't need so many farmers in the in the farm sectors or agricultural sectors the reason is because the technology improvements in the agricultural sectors save the farmers to the other sectors right such as the manufacturing sectors rights such as service sectors right so therefore even though even though like you know the other sectors the technology is keep constant we still can consume more crops as well as more manufacturing products all right so these diagrams can illustrate why so many farmers are missing in china and why those farmers become workers right the major reason is because technology improvement in agricultural sectors during past 40 years we save those labors to the other sectors eventually we can consume more crops as well as the more service and more manufacturing products right even though here we assume the technology level for the manufacturing sector keep constant technology level for the salary sectors keep constant obviously the other sectors you know technology improvement also increase however the technology improvements in the agriculture sector increased more than the other sectors so that's a major reason like you know the number of the farmers is decreasing and decreasing during the past 40 years but we still have a sufficient food sufficient crops any questions got it labor's goes for more intelligence needed sectors actually like you know labor is saved though in in those more intelligence needed sectors okay we don't need that so many labors in those sectors okay uh initially like you know in the agriculture in the agricultural sectors is a labor-intensive sectors while farmers can only taking care of one incurs of the land etc however right now you know so this sector is quite like you know automate automated right so therefore like you know we are using like you know more like you know less labors and more machines right so therefore we don't need that many laborers so those labors move to the other sectors exactly major company bought the farm and change it to technology labels so it depends on market demands what do you mean it depends on market demand can you explain can you explain i didn't get it hello hello it depends on market demands and its main rich industry is needed and the workers to go to the industry exactly exactly like you know as i said like you know initially the agriculture sector is the labor intensive sectors right industry or sectors however but right now it's not that case right so therefore it's moving to the manufacturing sectors or service sectors right we need we do need a lot of food deliveries right especially during the quarantine times right pandemic period right so like you know we cannot move right so therefore like you know everyone you stay at home right so we order a lot of uh products or commodity online right so we do need a food delivery right so therefore like you know we do need to hire a lot of the labor force in these sectors right so that's why farmers be become for the delivery right and the farmer become a workers etchers any question for these diagrams is this clear enough okay so obviously you know initially this blue curve is production possibility frontiers right so after technology improvements and we switch the blue curve to the brown ones and this this new curve is also production possibility frontiers right it means upon the limited resource and the technology this is the best we can do right this is the best we can do okay okay and uh okay we still have a few minutes so then we can talk about the difference between microeconomics and macroeconomics okay for this course we only focus this one microeconomics okay so for the economics we mainly speak splits economics into michael and macros okay so for microeconomics we only focus on the individual behaviors for examples how households and firms make decisions okay firms household nations make decisions or individuals like human beings so we are trying to help them how to make a good decisions right as i said every time every day every moment we face a a different problem we need to make decisions right so this is how microeconomics works okay how microeconomics works and for the macroeconomics they just look at the economy as a whole for examples for the microeconomics they focus on inflation unemployment economic growth etc then so for this kind of data it's called aggregate data the reason is because for example the unemployment you need a check for examples 100 peoples and the found out of five peoples are unemployed and 95 peoples uh are employees right so five people are unemployed and 95 people have a job so the unemployment rate is five percent so where to get these data you check the individual data and aggregate this data to have this kind of information right for the medical economies they are ho they are focusing the economy as a whole however for the micro economist they only focus the individual decisions okay so they focus each person's each firms each nations okay so that's why they're focused differently so therefore like economic economics and medical economies they are doing different type of research okay so basically the data type differs one is individual demo data the other is aggregate data so there's a major difference between microeconomics and the macroeconomics any questions any questions so those are the two major fields of the study in economics okay if you guys don't have a question or concerns let me stop here and i will see you guys the day after tomorrow and i will also send the recording videos to the class representatives uh once a week so it's after after the lecture of the thursday i will send the recorded video to her and she will help me to upload the recording videos to the google cloud and share the link to our witcher group okay okay let me stop here and see you guys uh the day of tomorrow bye bye bye bye bye bye bye thank you professor thank you professor bye bye you
2022-03-21 07:43
