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0:11
um let's get started this is uh 1401 uh microeconomics uh the uh and um I'm professor John Gruber now couple notes about the course uh there's a distinct policy angle to this course um I think personally what makes economics most exciting is it can you you can use it to think intelligently about the problems that policy makers face every day as they try to decide how to make the economy work the best for its citizens um in fact I teach a whole course about this called
0:43
1441 uh but I'm going to bring some of those insights into this class and use policy based examples and things like that to try to motivate uh and organize our thinking about economics um lastly uh three points about my teaching style first of all I don't write everything on the board uh for the Freshman here we're not in high schoool anymore you need to pay attention and listen to what I say not just what I write um so it's important to remember that um uh uh the second
1:11
point is as you can tell I talk really fast and my handwriting is really bad okay so please please don't be afraid to ask what the hell I just said or wrote okay there is if you don't know chances are at least 40% of the class doesn't know either we'll learn later this semester about the con a public good a public good is something you do which has a personal cost and a social benefit I understand raising your raising your hand in a class as large as this can be
1:38
intimidating but remember in doing so you're not just helping yourself you're helping your fellow classmates so please don't lean and Whisper loudly what the hell did you just say to the person next to you raise your hand and ask me because if you didn't understand many other people didn't as well more generally it's hard to get class participation in a class this large but I really encourage people to participate as much as possible I've never had a year in this
2:01
class where there's been too much participation I've had every single year too little participation so please follow up with questions uh things like that and then finally the third point about my teaching style is I have a bad tendency to use the term guys in a gender neutral sense so when I say guys I don't mean men I mean economic agents people everyone and I'm sorry guys has a gendered word often I don't mean it that way it's just kind of a economist talk for for economic agents we call them
2:28
guys what we're going to do today is talk about what is microeconomics what are you going to learn in this course what is the basic field about and then we'll dive in next time into actually starting to learn about the models that make up basic microeconomics um microeconomics is fundamentally in a sentence the study of how individuals and firms make themselves as well off as possible in a world of scarcity it's how individuals and firms make themselves as well off as possible in a world of
3:04
scarcity scarcity is key the core of microeconomics is constrained optimization basically individuals or firms assessing the tradeoffs they face every day in the decisions they make and then trying to decide the best decision given those tradeoffs so that is microeconomics is really about trade-offs mic economics is really about you can't have it all so what are you going to do with what you can have how are you best going to use your limited resources and the key concept behind all
3:42
this the sort of probably the I'm going to say about 100 times this is one of the most important Concepts in economics I'm sorry about that but this is really one of the most important Concepts in economics is the concept of opportunity
3:56
cost opportunity cost okay and opportunity cost is the notion that every action or in action has cost in terms of what you could have done instead in terms of the next best opportunity if you buy a shirt you are forgoing spending that money on buying something else so if you're deciding between shirts and pants you buy the shirt you're for going buying the pair of pants if you study if you spend all night studying you're forg going the opportunity to go see a band you like in concert and vice
4:33
versa every action you take is a trade-off every decision you make involves a trade-off because there's always an opportunity cost there's always something you could have done instead yeah great question um actually let me come back to that in one minute I want to come back to that or five minutes um okay so this is why economics is called the Dismal science we're called the Dismal science because the role of the economist is to basically say well you think that's free but it's not you think
5:05
you can just relax and watch TV but you know by watching TV you're giving up the opportunity to study the opportunity to go out see a concert or the opportunity to do something else okay so that's why they call disal science now some people may call dismal I call it fun and maybe that's because I was an MIT undergraduate and what is an engineering school but the land of constrainted optimization that's what engineering and science is it's all about what engineering is tra and optimization what
5:27
better example could there be in the two7 contests you're given a set of materials and asked to build something that's a constrained optimization exercise indeed economics was invented modern economics invented at MIT by The Economist Paul Samuelson who essentially said the mathematics that science Engineers use can be applied to analyze really the sort of essay likee approach that people had taken economics before him so he basically brought the tools of science to economics and basically
5:56
developed the course I'll teach today and the course that's taught all over the world was developed right here at MIT modern economics was born here because we introduced the tools of constraint optimization now oh over here I'm usually going to try to do like an outline of what we're covering so we talked about course details what is micro just did now let's talk about how we do that what economics does which is we use models and I'm talk about a model of supply and
6:24
demand how do we actually teach you all about these tradeoffs okay the way we do it is by building simplified models okay what is a Model A model is technically the description of any relationship between two or more variables is a model um now but unlike explaining relationship between energy and mass we do not have scientific laws and constants in our universe okay economics is as much as we hate to say it not a real science it is a social science which means that basically we don't have
6:59
rigid laws that we can write down say they're all they're everywhere applicable okay we we have to use models to basically try to explain the world as much as we can and so in doing so we have to make a set of simplifying assumptions a set of simplifying assumptions to try to essentially trade off two goals one goal is to explain as much as we can the other goal is to have parsimonious models that I can teach you okay the more complicated the model gets the harder it is to teach the
7:31
harder it is to solve this comes to the earlier question about are you really just trading off two goods well of course you're never just trading off two goods but we're going to write our models like you are and it's going to turn out that gives you all the intuition you need for a model with this three or four Goods it's just a lot easier math so it turns out everything you learn in the model with two goods tells you everything you need to know for a model with n Goods just with
7:50
easier math so that's the kind of simplifying assumption that's a fairly um uh that's a fairly uh non-offensive simplifying assumption think it doesn't really change anything we'll make other simplifying assumptions which are noxious and offensive and we'll talk about those and if you are offended by them and bothered and want to see what happens without those assumptions then that's exactly why you should be economics major because that's we go on and do in the rest of the
8:15
classes say okay now let's move on from these simplified models add some richness and see what it does to the world okay uh the statistician George box uh once wrote that all models are wrong but some are useful okay okay and that's exactly what we're going to try to work with today okay when I teach you economics I'm going to try to teach it to you on three levels okay the first is word MIT is mathematical the second is graphical and the third is intuitive really if you want to succeed
8:47
in this class you need to understand all three now not every model will I use all three but you want to understand all three of those Concepts to really understand the material we're learning here and and we'll start with the model of supply and demand the very first economic model developed by Adam Smith in 1776 in the book that was sort of the founding of Economics The Wealth of Nations Adam Smith asked the question um think about two goods think about water and think about
9:17
diamonds okay nothing is more essential for life than water we cannot function without it nothing is probably less essential for life than diamonds especially back then when diamonds didn't have industrial uses they were just bobbles okay water is clearly just essential diamonds aren't yet the price of diamonds is very high and water is essentially free he asked how could this be and the answer is because what I've just described is only one half of the model of where we get the price of water
9:48
or diamonds I've described the demand I've describe the demand for water and diamonds I've said the demand for water is much much larger than the demand for diamonds what I haven't talked about is the supply which is the supply of water is even more Rel the supply of diamonds water is everywhere diamonds are rare to find and what Adam Smith said is that while the demand for diamonds may not be as high as the demand for water the supply of diamonds is much much smaller
10:21
than the supply of water and that is why you could end up with a good that's inherently less valuable to life having a higher price okay and Smith's point is you can't just think of supply and demand and isolation you need to think of them uh together um is uh oh Pedro could you grab me a copy of the handout fix um okay so that's sort of the intuition that's the intuition Spider Man model now let's talk about the graphics and the math okay so now let's talk about an example of a supply demand
10:56
model and let's focus on the market for roses what is a market a Market's what it sounds like it's buyers and sellers coming together are there any more any extra handouts around is everyone have one everyone have a handout okay good that's fine then okay let's talk about the the markets for D let's talk about the market for Roses okay first of all what is a market a market is think of a market to start yeah like another page right the hand has graphs on it does anyone have hand
11:33
out did how me you
11:37
print what's that is there any is there an extra pile sitting around there of handouts we got some extras there okay pass those around make sure you know pass those around and uh yeah next time they'll be in the back so please you know raise your hand if you don't have a hand out and let's try to pass those around okay pedri can you grab one for me um okay so basically let's think about the market for Roses what is a market a market is a place where buyers and sellers come together to make
12:08
transactions okay think of it like the old timey markets of ancient England were literally the only way to transact was physically being in the same place where the buyers and sellers would come to Market once a week and the people bring their cows and people who wanted milk would come in or meat would come in and they would transact think of the market that way now of course that's not how the modern Market works but that's the way we want you to intuitively think of a market it's
12:32
literally a place where buyers and sells are interacting and it turns out that intuition will work even even given the modern economy okay so now who else doesn't have handouts everyone got the graphs okay all right so um now let's talk about the market for roses in figure 11 one we have the market for Roses okay on the xaxis the horizontal we have the quantity of roses I'm going to by the way try to have handouts for all the graphs because my handwriting is
13:04
so brutal so uh uh you shouldn't have to see hopefully if all goes well the sem you should never see me draw a graph on the board um so uh on the x-axis with the quantity of roses on the y axis we have the price of roses okay um the demand curve represents the relationship between price and quantity from the consumer's perspective so the domain curve in this this case is represented by the equation Q equals 1,800 minus 400 P okay now you're immediately say well what where's 1800 400 come from it
13:45
doesn't matter right now that's what we're going to teach you in the next few lectures right now that's just that's an equation that represents a line and it's the critical aspect of that equation is that there's a negative relationship between price and quantity as price goes up consumers want fewer roses why is that well it's just because of opportunity cost the more expensive is a rose the more you have to give up to buy it so its opportunity cost is higher so you want it
14:19
less okay so the higher is the price the fewer roses you want so we get a downward sloping demand curve the blue line now the supply curve represents the same relationship between price and quantity but from the supplier's perspective a supply curve in this case that we've drawn here has the equation Q equals 200p 200p you'll see here there is a positive relationship between price and quantity that is supply curve is upward sloping as price goes up firms will prod
15:00
firms will produce more roses why once again opportunity cost with a low price producing a rose means you can't use that farm to produce something else if the price of Rose is low you're going to use the farm for something else the price of roses is high you will then use that far to produce roses because that is a better choice than the next best alternative so once again this concept of opportunity has already helped explain the basic model of Economics the
15:26
single most important model of Economics is represented in this graph and you can understand it just by the concept of opportunity cost that is why we are such a powerful social science that's why all the other social sciences are jealous of us okay because we can use Simple tools to explain much to explain much of the world and here's a perfect example okay now we call the point where those two curves meet the equilibrium the point where supply and demand are in agreement is the
15:58
equilibrium that is the point at which suppliers are willing to sell roses at the same price consumers are willing to pay for them so with 600 roses 600 box of roses or whatever it is the the equilibrium price is $3 well it's a row so with 600 rows the equili price is $3 that is both parties are happy in equilibrium the key point about equilibrium as the name implies as the term equilibrium implies it's the point where the system has come to rest where both parties are happy
16:33
with the outcome both parties are happy because it's on the demand and supply curve since it's on the demand curve consumers are willing to pay $3 for 600 roses they wouldn't pay $4 600 roses but they pay three since it's on the supply curve suppliers are willing to accept $3600 roses they wouldn't accept $2600 roses but they'll accept $3 because it's on the Curve so basically it's just two equations and two unknowns you set these two things equal to each other and you solve and you get
17:07
qar equals uh qar equals 600 and P star equals three just by two equations and two unknowns once again why we only have two goods I could have done this in three dimensions the graph would have been uglier the math would have been harder but nothing would have changed yeah
17:33
oh that's a great question basically they are it's a good question we write down the function are basically invertible and we use them both ways is the bottom line it doesn't we're really writing down equili relation between q and P it doesn't really matter what X and Y is we're really just writing down an equili relationship it's just the convention is to put Q on the xaxis even though the con even though the convention will sometimes right toand curs was p on the
17:57
left hand side the graphic convention will never change but how you write the curves might change how we write the equations might change yeah use opportunity cost to justify why demand down sloping great question okay let's go through it that's exactly kind of question I want to hear the semester the reason demand is to someone take a crack at it any anyone to explain yeah and speak up if the price is higher in order to get that Rose you had to give up more
18:27
because the price represents like your opportunity right PR the opportunity cost of any good in the free market is its price so as the as the price goes up the opportunity cost goes up why because there's more other stuff you could have bought so if it's three bucks a row you could have bought you know a slice of pizza and a Coke but if four Buck if it's if it's four bucks a rose you uh four bucks a rose you don't have enough money left to buy both the Coke and the
18:53
and the slice of pizza so and but that's a great question because that's exactly where we're going to go next is the next three lectures are going to tell you where this equation comes from we're going to start with the basic principles of people's preferences really almost philosophical and we're going to derive this curve then after that the next five lectures will be deriving this curve we'll start with the basic principles of how firms make decisions and we'll derive the supply curve
19:25
yeah that that well it depends on on what I've written on the axis you're right this is this is confusing pedri should make a note we should probably make this clearer next time we should have called this number of roses or shouldn't have been called quantity of roses that's a great point we should call this number of roses or boxes of roses but it's per a quantity that's specified in the model great question thinking with MIT you cannot get away with with sloppiness here I
19:50
love it Harvard what the hell you write whatever you want yeah usually great question in indeed uh this is another cheat we'll do which we'll often write down nonlinear representations but draw them linearly um this is a linear representation but sometimes we'll have nonlinear curves and draw them linearly when we do think of it as a local approximation think of the linear piece as the local approximation to the larger function okay great questions I love it
20:20
okay now this raises this model raises a very important distinction that we're going to focus on the semester it's going to trip you up I guarantee a number of times so I want you to very careful thinking about this which is the distinction between positive economics and normative economics positive economics is the study of the way things are while normative economics is the study of the way things should be okay positive economics study the way things are normative economics to study the way
20:57
things should be okay now to consider to understand this let's consider a great example of Economics at work which is eBay okay when eBay came along okay I know it is older than all of you but it's younger than me when eBay came along economists are very excited because economists love auctions auctions are if you will The Standard Market that used to exist in you know 15th century England okay it's literally people beating against each other in a way that reveals who wants
21:31
the good the most and what's wonderful about that and we'll come back to this throughout the semester is it has two great features one is it makes sure the right amount gets produced and two is it makes sure the people who want it the most get it one beautiful feature of free markets is that they don't just get you to the right aggregate quantity they also get the get the goods in the hands of people who are willing to pay the most for them and that's what what eBay
21:54
did now one auction eBay got a lot of example got a lot of attention I'm sorry got a lot of attention which is that somebody put their kidney for auction on eBay they auctioned their kidney they said I'll give you my kidney for let the bidding started $225,000 the bidding got up to $5 million before eBay shut it down and said no auctioning human body parts on eBay okay now I don't know why they stopped at five million out earlier but whatever okay so we can with this example we can
22:21
ask both a positive and a normative question the positive question is why did the price get so high and here we only need AAL to supply demand model the demand for a kidney is going to be pretty high if you need a kidney to live you're going to pay approximately everything you have to get it the supply of kidneys on the free market is pretty low like that was the only one I know of okay so it's a classic case with a very high demand and a very low Supply you're going to get a
22:51
very high price and so it's not surprising the price went up and probably would have gone up further if eBay hadn't shut it down but but now we come to the normative question which is more interesting and harder which is um should we be allowed to sell our bodily organs on eBay okay you might think that this is a question here in philosophy class but fundamentally it's an economics question okay many folks die in America because though because we do not have
23:18
enough organs to help those with organ failure we we have a limited supply of organs I hope you all are organ donors on your driver to licenses doesn't cost you anything you're gone in anyway and it can save a life um but um many people don't do that and uh even if they did we're just we have a higher demand for organs than we can fit now if someone who wants an organ is wealthy and willing to pay a lot of money for it and there's someone else who says look I got two kidneys you can function
23:53
just fine with one the oddy of kidney failure is really low someone says look I am desperate Straits I can't feed my family I can't house my family I could sell one kidney still function fine and change my life forever educate my children build a house do the things I need to do why shouldn't we let that happen so standard economics would say great let them auction their body parts but in fact there's reasons why we don't think many there's many reasons why that may not a good outcome what are
24:30
those what are reasons we might not want to just say sure let a rip what are some reasons yeah go
24:42
ahead yeah so there's fundamentally two kinds of reasons the first kind is what we'll call market
24:54
failures market failures are something we're not going to cover for about the first 11 lectures for the first 11 lectures the free market is going to be king let me be very clear with you economics is fundamentally a right-wing science okay as we'll come clear through the semester I'm kind of a leftwing guy but economics is pretty much a right-wing science in basic economics says the market knows best and the and there's only two reasons why you should ever interfere
25:23
with with the market and the first is because for some reason the Market's not working properly this is an example we it would be fine if everyone knowledgeably went into this transaction but what if this turns out this can cause people to like force force their children to give up their kidney or do things against their will other criminal activities um what if people don't really understand how dangerous it is to give your kidney there's 50,000 Americans every year
25:52
there's now currently about 100,000 Americans living with hepatitis C which causes kidney failure he C can live dormant for years before you know you have it what if you give up your kidney find hepatitis C then you're dead so there's lots of reasons why I think well maybe this Market doesn't work quite as well as economists say it does people might be misinformed people might be F people might be forced to do it what's interesting is the black market is not necessarily one of those reasons and
26:19
here's why because the black market economists just say is a market let's say eBay doesn't allow you to sell your kidneys so you have to sell it on the black market well if there's no other market failures that's okay for the same reason economists think it'd be okay to sell your body parts there's no reason why I tell your body parts on a form Market informal Market the only reason why it would be bad would that informal Market comes with other unsavory features like forcing people to sell
26:45
their body parts or not being informed that's what it be bad okay what other reasons might we care might be worried about people selling the kidneys yeah why T shouldn't the back it would mean that only like really rich people great great answers guys the second reason we care is what we call Equity or fairness which is we might not think it's fair that rich people get to live and poor get to live longer and buy the organs and poor people don't okay we might think this is that
27:13
that this is an unfair outcome now this is what's fascinating about America which is even though we pride ourselves on being the land of the market economy we also care a lot about fairness as a nation and this is viewed by many as being complately unfair that the Richer you are the more you can just buy part body parts off poor people now here's what's a little bit sad about this class and the sad about the limitation of only having you know the number of weeks we have which is I'm
27:41
not going to talk nearly as much about Equity as I'd like to 90% of this course is going to be about efficiency it's going to be about does the market work does the market deliver the right quantity of goods it's not about equity which is well does that right quantity end up going end up causing huge inequality in Society so that is kind of another reason why we might care okay and we will discuss Equity leing the semester but unfortunately not to much later all
28:07
right other questions or thoughts about that okay let me finally talk about one last thing which sort of seems like you got to talk about in the first lecture of of an economics class which is what about the underlying structure of the economy how do we think about different models of how economies function and the fundamental conflict is between a capitalist model and a command
28:38
model the capitalist model in its purest form What's called the LA fair or let it be uh model is one where individuals decide what to produce and consume with no interference it's a purely free market okay it's the market that sort of existed 500 years ago before we had sort of the truth is it never existed there's no such thing we will do a lot of teaching by Extremes in this course we'll talk about extremes it's a great learning device but there's no never been such as a purely capitalistic
29:11
economy most economies like the US are Market driven but government and socially constrained what does that mean that means yes we let GM decide how many cars to produce but we have standards on what emissions those cars can have and how safe they have to be in a purely capitalist economy GM could produce the most dangerous cars they wanted no one would care and they could be smog Laden and no one would care obviously we don't have that in America we have regulations
29:40
we have taxes on gas we have rules on what you can learn and where you can learn it Etc so we have what we call a sort of constrained capitalist economy where fundamentally the decisions on what to produce and what to consume are made by individuals within a set of rules set up by the government and some also set up by social norms okay now the opposite extreme is what we call a command economy and we actually had almost the closest model that could exist to this which was the
30:09
Soviet Union of my youth the Soviet Union of my youth it's typically associated with Communism although it doesn't have to be command economies don't have to be associated with Communism Germany in World War II was a command economy in the service of fascism it's typically associated with Communism is what we call a command economy in in that extreme the government makes all production allocation decisions people don't decide what they get the government decides
30:33
what they get so it's the other extreme there's no free transactions it's the government making all the rules not just about how much should be produced but who gets what's produced okay so in the free market the market subject set of government sort of you guys have bowled there's like the bumpers you can up when you're little kid and you bowl and they keep the ball on that bowling lane so think of the government you know in a capital economy is those sort of those those those uh
30:56
guides on the side that help keep the ball in the lane but but you get to throw the ball on decide what if you're going to which pin you're going to go for in in command economy they literally they tell you go to the end of Lane and knock down pin seven okay uh it's a very it's a very different model now in theory the argument for the command model is that it can ensure that the right Goods get produced and distributed as fairly as possible the idea this the
31:24
theory is quite simple it goes back to KL marks the theory makes a lot of sense which is look the government's job is to make sure society's as well off as possible it does that by making sure the right things get produced and get to the right people and we can't trust the market to do that only the government can do that okay this is a great argument in theory in practice it doesn't work and it doesn't work for two reasons it first of all it's just too damn hard to make all those
31:54
decisions any government no matter how large and how benevolent cannot make the enormous massive quantity of billions and billions of decisions that need to be made think about every good we consume in America a government deciding how much of it to make and literally who gets it okay it's overwhelming governments can't do it so that led to things like in East Germany I was in East Germany a year ago and I went to went to the Museum of East Germany and uh they talk about how in in back in
32:19
communist days in East Germany uh no one had cars but they had so much bread they would feed bread to their pigs for food okay because the government sort of screwed up and decided you know commanded too many too much bread and too few cars okay that's natural it's going to happen it's just too hard okay the second problem is that human nature being what it is a command economy inevita leads to massive corruption because when a handful of people are in charge of deciding everything of course
32:46
they're going to make their lives the best first so I'm not saying there's not corruption in capitalist economies but it's sort of inherent in a command economy it's inherent because you're giving a set of people the power to decide who gets what and it's inevitably in human nature they'll decide to give themselves the most and first so that is why really why the Soviet Union collapsed because the command economy simply couldn't get it done and let's be clear it did not appear inevitable in the
33:14
1950s there was huge Envy in the US of what the Soviet Union was accomplishing they came out of a devastating war and built a manufacturing base that was the Envy of the entire world even the US almost overnight it was incredible and a lot of people questioned whether that might after all not be the right model it just it turns out over about 30 years it fell apart because it just wasn't sustainable now the alternative of course is the uh US economy the capital economy which operates by what the
33:42
famous the father of economics Adam Smith calls the Invisible Hand the notion invisible hand is you don't need a government to make all these decisions because the market makes it for you the Invisible Hand of the market decides how much you get produced and who should get it not through any one person making decisions but just through people coming together in a market and working together to make those decisions and that's what we'll teach you this semester how the market works and how
34:06
those that invisible hand can lead through the magic of the market to the right Goods being produced and getting in the hands of the right people okay so that's a huge advantage and it's worked America is the richest nation in the world we've grown rapidly for centuries now um and we are um and and we're very successful on the other hand it leads to tremendous inequality because the way the right person to have the good is the person who can pay the most for it right in the
34:35
command economy the right person have the good corruption aside is who needs it the most we take our kidney example the command economy would say well let's find the person close to death and give them the kidney the capital econ say let's find the person willing to pay the most to give them the kidney well that's unfair and that is an inevitable outcome of a capitalist economy America is the most unequal major nation in the world World our inequality dwarfs what we see
35:01
in other countries around the world the top 1% of Americans control 25% of all the income in the US which is which is at least 5% higher than any other major nation in the world okay so we have large inequality because basically the Mark it's inevitable in a market that'll happen because people who want to pay the most get the stuff okay so that gives you the tradeoff the consensus I would say among virtually every Economist is that a command economy is not the way to go the
35:35
debate is within the capitalist model how far the government should intervene if you look at countries like Europe they have a much more intervenous Economist you'll Europe countries being called socialist they're not socialist socialist means the government controls the industry socialist would be there still consumers don't going decide what to buy but the government produces everything the government runs the banks the government runs the airplanes the government decides how much steel to
36:00
produce the government so in substance a socialist is sort of halfway between capitalist and command economy where the government does the production but Market forces decide the allocation that's not true in any other major country in the world okay these countries are all different levels of constrained capitalist economies they're all different width of those bowling alleys okay in Europe and many European nations they have much more constrained capitalist economies much higher taxes
36:26
much more government prevention also much more equal and we'll be talking about this semester and what I focus on much more in my course 1441 is how do we think about those trade-offs between a Freer economy which is larger but leads to more inequality than the US and a less free economy with less inequality okay so to guide you to where we're going to go I'm really big on sort of making sure you have a big picture of where we are in this class and once again if you're confused not just about
36:53
the little picture but the big picture let's talk I do urge people come talk to me I generally my rule is if it's like a question about a problem set go see the Tas if it's a question about like I don't understand a concept or I want to talk about economics in general or life in general or music or whatever then come see me okay and I really do urge you folks to come come see me uh now that I'm chair going I have to be around all the time so I'm around plenty of
37:15
time please just make an appointment and come see me so where we're going to go from here what we're going to do like I said is the next few lectures we're going to map out what makes a demand curve then we're going to map out what makes a supply curve then we're going to put them together and talk about basically in some sense come back to where we started but now with an understanding of what demand and Supply mean and why the equilibrium makes sense we'll then talk about we'll then turn to
37:39
normative economics and talk about why the market equilibrium is really the best outcome we're then going to start to talk about where the standard so it's been about the first I would say half of the class on the standard economic model the second half of the class will be focused on where the standard model breaks down what happens when there's monopolies like Google effectively a monopoly on search engines what happens when we want to trade with other countries what
38:07
happens when we have to decide how much to save and how hard to work what happens when we have to decide um where to invest and what to do about global warming these are all the questions we'll tackle in the second half of the class okay so let me stop there and I hope I'll be seeing you all uh every Monday and Wednesday thank you
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