at 12:40 when you're plugging in Alice and Kevins Demand for X, why did you use Xa (Alice demand function) twice when plugging in Xa + Xk = 10 In the video you had it as (3Px + 2Py)/Px + (3Px + 2Py)/Px = 10 shouldnt it be (3Px + 2Py)/Px + (2Px + 3Py)/Px = 10 because Alice demand function is (3Px + 2Py)/Px and Kevins demand is (2Px + 3Py)/Px
If you try the calculation with the X from Kevin and the X from Anna you will get the same results eventually. Because then we have 5=5px and not 4=4Px --> Px=1 will still be the result
@@rosemondohenewaa3608 I noticed the same thing as well. However, when you do the the right substitution, you would arrive at the same answer. the problem now is why repeating Xa twice. Because, Xa+Xa is not equal to 10
14:40 I have a question, if you say this is Pareto efficiency where one must be worse off if the other becomes better off, then how towards the end @15:00 we proved that both ended better off having higher utility than the initial endowment?
When you achieve a pareto efficient outcome, it is impppssible to make one person better off without hurting the other person. At the end of the video, once the trades/exchanges have been made, it will now be impossible to find another trade that makes both people better off. The initial outcome before the people traded was not pareto efficient because we found a trade that could make both better off. Any outcome on the contract curve is pareto efficient. Any outcome not on the contract curve is not pareto efficient.
Good video. At 9:00 it is said that because X and Y are raised to the same power in the Cobb-Douglas utility function Alice spends half her income on each good. How do we work out the proportion in which Alice spends her income when the powers are not the same?
You want to normalize the exponents to sum to 1. Suppose X is raised to power a and Y is raised to power b. The proportion of income spent on good X is a/(a + b). The proportion of income spent on good Y is b/(a +b).
How yoy can write demand for Xa equal to .5 (M)/Px Where in marshallen demand for commodity is equal to M/ 2Px I can not understand this step Please explain in simple words
A nice property of Cobb-douglas utility functions is that if the exponents on both of the goods are the same, the consumer will spend half her income on each good or 0.5M. The number of units of good X that can be purchased is then 0.5M/Px. For good Y, it is 0.5M/Py.. I have a video that discusses this in more detail: Cobb-douglas utility maximization shortcut solutions.
I believe you made a mistake at 12:37. The function should read ((3Px+2Py)/Px))+ ((2Px+3Py)/Px)=10. You repeated Annes demand for A twice. I may be wrong. Please let me know.
absolutely wrong equation both X and Y cannot be raised to same power except at 0.5.. else if X is raised to some power than Y will be raised to 1 minus the power of X
That is not true. A Cobb-Douglas utility function is U = (X^a)(Y^b), where a > 0 and b > 0. The exponents do not have to sum to 1, although any Cobb-Douglas utility function can have its exponents normalized to sum to 1. For example, U = XY is equivalent to U = (X^0.5)(Y^0.5). Likewise U = (X^2)(Y^3) is equivalent to U = X(^0.4)(Y^0.6).
@@mindloop4070 U = (X^a)(Y^b), where a > 0 and b > 0. With this more general formulation, the share of income spent on good X is a/(a + b) and share of income spend on good Y is b/(a + b). ruclips.net/video/awvPbUWAAus/видео.html
I think there is a mistake at 12:00 when you ad Xa and Xk, you used Xa twice. The result shouldn't be different though, since it's corrected afterwards. Probably just a typo but it can be confusing for viewers. Nice videos btw, it helps a lot.
i have never seen a better video on this topic in my whole life man
you just saved me from having a panic attack over my final, thanks
Another very helpful and thorough video, deeply appreciated!
Thank you for watching!
What if the power of X Y is not the same. Could we use the proportion between them to find how much they will spend?
at 12:40 when you're plugging in Alice and Kevins Demand for X, why did you use Xa (Alice demand function) twice when plugging in Xa + Xk = 10
In the video you had it as (3Px + 2Py)/Px + (3Px + 2Py)/Px = 10
shouldnt it be (3Px + 2Py)/Px + (2Px + 3Py)/Px = 10
because Alice demand function is (3Px + 2Py)/Px and Kevins demand is (2Px + 3Py)/Px
yeah... that is the same thing l realized also. I am getting confused
Yeah
If you try the calculation with the X from Kevin and the X from Anna you will get the same results eventually. Because then we have 5=5px and not 4=4Px --> Px=1 will still be the result
@@rosemondohenewaa3608 I noticed the same thing as well. However, when you do the the right substitution, you would arrive at the same answer. the problem now is why repeating Xa twice. Because, Xa+Xa is not equal to 10
bro you just saved my life, perfect explanation.
This video is very useful but I am just wondering how would you calculate the indifference curves on this graph?
great video man! really appreciate this stuff!!
Thanks for the video. Appreciatte.
Sir kindly review the solution for the equilibrium quantity and price again. I think there is a little error there.
THANK YOU FOR YOUR VIDEO!
Thank you so much
My pleasure!
Please what software are you using to draw the box?
How would I calculate the MRS if one of the functions was a case of perfect complements, i.e. U=min{x,2y}
maybe this will help:ruclips.net/video/4MAYWI0kxPc/видео.html
14:40 I have a question, if you say this is Pareto efficiency where one must be worse off if the other becomes better off, then how towards the end @15:00 we proved that both ended better off having higher utility than the initial endowment?
When you achieve a pareto efficient outcome, it is impppssible to make one person better off without hurting the other person. At the end of the video, once the trades/exchanges have been made, it will now be impossible to find another trade that makes both people better off. The initial outcome before the people traded was not pareto efficient because we found a trade that could make both better off. Any outcome on the contract curve is pareto efficient. Any outcome not on the contract curve is not pareto efficient.
@@EconomicsinManyLessons Wonderful! 🌹
Good video. At 9:00 it is said that because X and Y are raised to the same power in the Cobb-Douglas utility function Alice spends half her income on each good. How do we work out the proportion in which Alice spends her income when the powers are not the same?
You want to normalize the exponents to sum to 1. Suppose X is raised to power a and Y is raised to power b. The proportion of income spent on good X is a/(a + b). The proportion of income spent on good Y is b/(a +b).
What about if the utility function isn’t of the cobb Douglas form - say it’s u=x+y
@@EconomicsinManyLessons u saved me twice today
thank u for asking this question
00:31 what is the meaning of 0.8?
How yoy can write demand for Xa equal to .5 (M)/Px
Where in marshallen demand for commodity is equal to M/ 2Px
I can not understand this step
Please explain in simple words
A nice property of Cobb-douglas utility functions is that if the exponents on both of the goods are the same, the consumer will spend half her income on each good or 0.5M. The number of units of good X that can be purchased is then 0.5M/Px. For good Y, it is 0.5M/Py.. I have a video that discusses this in more detail: Cobb-douglas utility maximization shortcut solutions.
I believe you made a mistake at 12:37. The function should read ((3Px+2Py)/Px))+ ((2Px+3Py)/Px)=10. You repeated Annes demand for A twice. I may be wrong. Please let me know.
great video the volume is very low though.
The fonts size is too small to see.
boss
Thanks!
absolutely wrong equation both X and Y cannot be raised to same power except at 0.5.. else if X is raised to some power than Y will be raised to 1 minus the power of X
That is not true. A Cobb-Douglas utility function is U = (X^a)(Y^b), where a > 0 and b > 0. The exponents do not have to sum to 1, although any Cobb-Douglas utility function can have its exponents normalized to sum to 1. For example, U = XY is equivalent to U = (X^0.5)(Y^0.5). Likewise U = (X^2)(Y^3) is equivalent to U = X(^0.4)(Y^0.6).
@@EconomicsinManyLessons since a is the share of income spent on good x so logically 1-power of x or (1-a )is the share of income spent on good Y
@@mindloop4070
U = (X^a)(Y^b), where a > 0 and b > 0. With this more general formulation, the share of income spent on good X is a/(a + b) and share of income spend on good Y is b/(a + b).
ruclips.net/video/awvPbUWAAus/видео.html
It is too blare to see
Thank u so much, u saved me from taking hrs reading it ,and u covered it for 15mins🫂💕
I think there is a mistake at 12:00 when you ad Xa and Xk, you used Xa twice. The result shouldn't be different though, since it's corrected afterwards.
Probably just a typo but it can be confusing for viewers.
Nice videos btw, it helps a lot.