I want to know how to mathematically find that optimal point using the prices given not just know where it is, why would you leave out the most important part
find the slope of the budget line and equate it to the derivative of the indifference curve to obtain a differential equation, then solve the equation to find the equation of indifference curve . using both the equations you can easily find the point of intersection.
"Discuss": Marginal Utility (partial derivative) with respect to x divided by Marginal unity with respect to Y, set equal to the relative price of X to Y, then solve. [(MUx/MUy)=(Px/Py)]
***** Aha, but if there really are infinite indifference curves on the diagram (as he and my study book say), there should also be infinite points along the budget constraint line to which one IC is tangent to. Please can somebody explain this??
bigfriki you first need to know the properties of IC curve( indifference curve). one of the properties says that no two indifference curve can intersect within the quadrant. so due to this property (i think) there can't be 2 IC curves which are tangent to a budget line. :)
yash chandak Yeah, you're absolutely right. I also ended up understanding it. The cue is that everyone has their own valuation of the two goods. Once that is decided, the ICs can't cross. Very right sir. :)
I don't understand at 7:53 when he writes the quantity of fruit at two different prices. I think he is listing the price and its correspondent quantity at two different optimal points when we change the price of fruit, so when the price is $2, its quantity must be about 4 (not 8) for optimal point, isn't it???
I want to know how to mathematically find that optimal point using the prices given not just know where it is, why would you leave out the most important part
Yup.. i came to this video hoping to get that explanation too
find the slope of the budget line and equate it to the derivative of the indifference curve to obtain a differential equation, then solve the equation to find the equation of indifference curve . using both the equations you can easily find the point of intersection.
Kindly do another video that shows us how to directly find the optimal bundle
the optimal point is where the indifference curve and the budget line intersect (aka the derivative of the indifference curve)
When the indifference curve hits the Budget Line, It creates "equilibrium points" where the Marginal Utility is not increasing or decreasing.
if i have an utility function and a utility level, how should i calculate the optimal point?
ok but calculating the point of tangency....? you just blanket over it and discuss the idea of it
set/find MRS=MRT
"Discuss": Marginal Utility (partial derivative) with respect to x divided by Marginal unity with respect to Y, set equal to the relative price of X to Y, then solve. [(MUx/MUy)=(Px/Py)]
I still dont know exactly where the optimal point is on the budget line
PSYCHOSTORM32 me too
PSYCHOSTORM32 where the indifference curve is tangent to the budget line.
***** Aha, but if there really are infinite indifference curves on the diagram (as he and my study book say), there should also be infinite points along the budget constraint line to which one IC is tangent to. Please can somebody explain this??
bigfriki you first need to know the properties of IC curve( indifference curve). one of the properties says that no two indifference curve can intersect within the quadrant. so due to this property (i think) there can't be 2 IC curves which are tangent to a budget line. :)
yash chandak
Yeah, you're absolutely right. I also ended up understanding it. The cue is that everyone has their own valuation of the two goods. Once that is decided, the ICs can't cross. Very right sir. :)
how did you determine where to draw the indifference curve though?
I don't understand at 7:53 when he writes the quantity of fruit at two different prices. I think he is listing the price and its correspondent quantity at two different optimal points when we change the price of fruit, so when the price is $2, its quantity must be about 4 (not 8) for optimal point, isn't it???
12 years later I'm wondering the same thing haha
Gold Standard Education.
Can you do a video on these topics!!! Endowment Effect, Prospect theory. I love these videos, they are a huge help :)
perfect! thanks a lot
Thank you very much...!
so helpful man. thanks a lot.
Thanks buddy
you really are a smart man, thank you!
Hey KhanAcademy - Could you upload more videos about French history?
something is missing..you didn't explain indifference curves and jumped onto this..
+Gaurav Upadhyay he did, its an series of videos, so it's in the revious video
+EDMango nope he did not
Next video.
The first optimal point, why is 2 and 8,not 2 and 5? Last slide
yea ur right
xiafei cen actually, his teaching method is good, however, he teaches wrong things :D
budget line definies the feasible set ?
thanks, though! ^^
Indifference curve is first introduced in which video?
eh, i'm not too fussed about whether or not i know
not a good way of representation...........not understand well
chocolate>fruit
Wrong.