COST BENEFIT ANALYSIS ECONOMICS: economics explained, consumer surplus & willingness to pay examples
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- Опубликовано: 12 июл 2024
- COST BENEFIT ANALYSIS ECONOMICS EXPLAINED!!!
This highlight navigates you through Cost Benefit Analysis. You will gain new understanding of your own willingness to pay, net benefit and consumer surplus in real world examples as well as in the microeconomic model.
Intuitive. Key. Concepts explained simply.
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Chapters:
0:00 Introduction
1:05 Cost Benefit Analysis
1:58 Example
2:57 Willingness to Pay
4:44 The Model
6:39 Consumer Surplus
8:18 Coming up
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The next video in the Cost Benefit Analysis Block is:
How to apply cost benefit analysis • HOW TO APPLY COST BENE...
To deepen your understanding of cost benefit analysis watch the other videos in this Block:
3. Marginal Benefit Equals Marginal Cost • MARGINAL BENEFIT EQUAL...
4. Opportunity Cost Benefit Analysis • OPPORTUNITY COST BENEF...
5. What is a Sunk Cost • WHAT IS A SUNK COST? a...
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Happy Highlighting!
Rob and Rebekah
I found it interested how you connected daily life dots with cost benefit analysis. It made me think and evaluate cost benefit analysis in lots of daily life activities .
Keep it up man
Thanks Shubham! That is exactly what we want you to get from the videos! 😊
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Thanks for watching.
Happy Highlighting
Rob and Bek
so very clear, you are indeed a teacher
You are a best lecturer.You cleared my concept very easily. I also learn from you that how to teach without any hesitation.
amazing video
cleared all my concepts
Thanks😁, so pleased you found it helpful, let us know if there are any other key concepts you would like us to cover! Happy Highlighting!!!
this was a really great video! Thank you :D
Thanks Gabriela - Glad you found it useful! Are there any other specific topics you would like us to add to our list of future videos to cover?
what I mostly don't understand about this economic theory is that it is so unrealistically simple and makes something complex overly simple and hence a lot of problems follow. I never really got that part and still much of our economy 'runs' on those ideas. They run not really well obviously, it's rather running wild with our world, but looking at the underlining theories they have build it on, it's not a surprise. And that they try to remedy it is cute, but as many powerful people have build their power up on this simplistic underground, it's not easy to take it down and make it more realistically complex and fitting with the real world complexity.
I don't know if history could have gone another way. for some reason western reasoning especially after enlightentment really took a turn towards reductionism and overly simplifying the world into theories that are greatly lacking in realism and nevertheless get used. Is it because of the in the beginning seemingly very succesful newtonian fysics and they tried to copy it? or it's probably a more complex phenomenon ;) . Nevertheless, micro economics should have stayed micro, it's very useful in daily trading and simple interactions. The problems came when they forced this kind of thinking onto complex macro problems. You can force it, but it looks awkward and feels very plastic. (and it's awkward to use... having reports with mountains of assumptions and a lacking framework)
Hello Blueberrymint1,
Just in terms of your question; “it is so unrealistically simple and makes something complex overly simple and hence a lot of problems follow” - All models in economics are simplifications in some way, usually to help us understand a core idea, mechanism or market problem. However, the “problems “generally tend to arise when they are interpreted incorrectly or outside of the context they are intended.
The idea of Cost Benefit analysis is not that everyone behaves in this exact way, performing mental auctions when evaluating every decision, but generally our decision-making has been proven to be consistent with this framework. And we can build on this basic framework by developing the model further to explore specific question such as “why do consumers buy less of most products as the cost (price) increases?” or “how do consumers decide between different size options of products e.g. small, medium and large popcorn at the cinema?”
Also, when models have multiple assumptions, it can help to relax one assumption at a time to explore the specific consequences of that assumption. That way, we can pin down what really causes the outcome of the model to change, and which assumptions are not actually very restrictive at all.
No economic model is perfect but they help us to understand key market forces and other issues.
Hope that helps,
Rob