0315 micro

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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

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