[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:00.73,0:00:03.47,Default,,0000,0000,0000,,So let's just review what\Nwe've seen with budget lines.
Dialogue: 0,0:00:03.47,0:00:05.84,Default,,0000,0000,0000,,Let's say I'm\Nmaking $20 a month.
Dialogue: 0,0:00:05.84,0:00:08.87,Default,,0000,0000,0000,,So my income is $20 per month.
Dialogue: 0,0:00:08.87,0:00:09.82,Default,,0000,0000,0000,,Let's say per month.
Dialogue: 0,0:00:12.35,0:00:18.29,Default,,0000,0000,0000,,The price of chocolate\Nis $1 per bar.
Dialogue: 0,0:00:18.29,0:00:23.73,Default,,0000,0000,0000,,And the price of\Nfruit is $2 per pound.
Dialogue: 0,0:00:23.73,0:00:25.42,Default,,0000,0000,0000,,And we've already\Ndone this before,
Dialogue: 0,0:00:25.42,0:00:27.75,Default,,0000,0000,0000,,but I'll just redraw\Na budget line.
Dialogue: 0,0:00:27.75,0:00:31.05,Default,,0000,0000,0000,,So this axis, let's say this\Nis the quantity of chocolate.
Dialogue: 0,0:00:31.05,0:00:32.82,Default,,0000,0000,0000,,I could have picked\Nit either way.
Dialogue: 0,0:00:32.82,0:00:36.17,Default,,0000,0000,0000,,And that is the\Nquantity of fruit.
Dialogue: 0,0:00:39.93,0:00:41.81,Default,,0000,0000,0000,,If I spend all my\Nmoney on chocolate,
Dialogue: 0,0:00:41.81,0:00:44.55,Default,,0000,0000,0000,,I could buy 20 bars\Nof chocolate a month.
Dialogue: 0,0:00:44.55,0:00:45.60,Default,,0000,0000,0000,,So that is 20.
Dialogue: 0,0:00:45.60,0:00:47.31,Default,,0000,0000,0000,,This is 10 right over here.
Dialogue: 0,0:00:47.31,0:00:49.74,Default,,0000,0000,0000,,At these prices, if I\Nspent all my money on fruit
Dialogue: 0,0:00:49.74,0:00:51.95,Default,,0000,0000,0000,,I could buy 10 pounds per month.
Dialogue: 0,0:00:51.95,0:00:53.42,Default,,0000,0000,0000,,So this is 10.
Dialogue: 0,0:00:53.42,0:00:54.72,Default,,0000,0000,0000,,So that's 10 pounds per month.
Dialogue: 0,0:00:54.72,0:00:56.01,Default,,0000,0000,0000,,That would be 20.
Dialogue: 0,0:00:56.01,0:00:58.24,Default,,0000,0000,0000,,And so I have a budget\Nline that looks like this.
Dialogue: 0,0:01:01.03,0:01:04.29,Default,,0000,0000,0000,,And the equation of this budget\Nline is going to be-- well,
Dialogue: 0,0:01:04.29,0:01:05.41,Default,,0000,0000,0000,,I could write it like this.
Dialogue: 0,0:01:05.41,0:01:09.34,Default,,0000,0000,0000,,My budget, 20, is going\Nto be equal to the price
Dialogue: 0,0:01:09.34,0:01:13.43,Default,,0000,0000,0000,,of chocolate, which is 1, times\Nthe quantity of chocolate.
Dialogue: 0,0:01:13.43,0:01:15.81,Default,,0000,0000,0000,,So this is 1 times the\Nquantity of chocolate,
Dialogue: 0,0:01:15.81,0:01:18.67,Default,,0000,0000,0000,,plus the price of\Nfruit, which is
Dialogue: 0,0:01:18.67,0:01:23.52,Default,,0000,0000,0000,,2 times the quantity of fruit.
Dialogue: 0,0:01:23.52,0:01:25.10,Default,,0000,0000,0000,,And if I want to\Nwrite this explicitly
Dialogue: 0,0:01:25.10,0:01:27.14,Default,,0000,0000,0000,,in terms of my\Nquantity of chocolate,
Dialogue: 0,0:01:27.14,0:01:28.68,Default,,0000,0000,0000,,since I put that\Non my vertical axis
Dialogue: 0,0:01:28.68,0:01:31.22,Default,,0000,0000,0000,,and that tends to be\Nthe more dependent axis,
Dialogue: 0,0:01:31.22,0:01:33.54,Default,,0000,0000,0000,,I can just subtract 2\Ntimes the quantity of fruit
Dialogue: 0,0:01:33.54,0:01:34.48,Default,,0000,0000,0000,,from both sides.
Dialogue: 0,0:01:34.48,0:01:35.70,Default,,0000,0000,0000,,And I can flip them.
Dialogue: 0,0:01:35.70,0:01:37.59,Default,,0000,0000,0000,,And I get my\Nquantity of chocolate
Dialogue: 0,0:01:37.59,0:01:42.30,Default,,0000,0000,0000,,is equal to 20 minus 2\Ntimes my quantity of fruit.
Dialogue: 0,0:01:42.30,0:01:44.61,Default,,0000,0000,0000,,And I get this budget\Nline right over there.
Dialogue: 0,0:01:44.61,0:01:47.45,Default,,0000,0000,0000,,We've also looked at the idea\Nof an indifference curve.
Dialogue: 0,0:01:47.45,0:01:49.14,Default,,0000,0000,0000,,So for example,\Nlet's say I'm sitting
Dialogue: 0,0:01:49.14,0:01:51.39,Default,,0000,0000,0000,,at some point on my\Nbudget line where
Dialogue: 0,0:01:51.39,0:01:55.20,Default,,0000,0000,0000,,I have-- let's say I am\Nconsuming 18 bars of chocolate
Dialogue: 0,0:01:55.20,0:01:57.06,Default,,0000,0000,0000,,and 1 pound of fruit.
Dialogue: 0,0:01:57.06,0:01:58.77,Default,,0000,0000,0000,,18-- and you can\Nverify that make sense,
Dialogue: 0,0:01:58.77,0:02:01.17,Default,,0000,0000,0000,,it's going to be $18\Nplus $2, which is $20.
Dialogue: 0,0:02:01.17,0:02:05.48,Default,,0000,0000,0000,,So let's say I'm at this\Npoint on my budget line.
Dialogue: 0,0:02:05.48,0:02:08.96,Default,,0000,0000,0000,,18 bars of chocolate,\Nso this is in bars,
Dialogue: 0,0:02:08.96,0:02:11.17,Default,,0000,0000,0000,,and 1 pound of fruit per month.
Dialogue: 0,0:02:11.17,0:02:12.24,Default,,0000,0000,0000,,So that is 1.
Dialogue: 0,0:02:12.24,0:02:14.82,Default,,0000,0000,0000,,And this is in pounds.
Dialogue: 0,0:02:14.82,0:02:19.69,Default,,0000,0000,0000,,And this is chocolate, and\Nthis is fruit right over here.
Dialogue: 0,0:02:19.69,0:02:22.06,Default,,0000,0000,0000,,Well, we know we have this\Nidea of an indifference curve.
Dialogue: 0,0:02:22.06,0:02:24.38,Default,,0000,0000,0000,,There's different combinations\Nof chocolate and fruit
Dialogue: 0,0:02:24.38,0:02:25.92,Default,,0000,0000,0000,,to which we are\Nindifferent, to which
Dialogue: 0,0:02:25.92,0:02:28.96,Default,,0000,0000,0000,,we would get the same\Nexact total utility.
Dialogue: 0,0:02:28.96,0:02:31.14,Default,,0000,0000,0000,,And so we can plot\Nall of those points.
Dialogue: 0,0:02:31.14,0:02:31.99,Default,,0000,0000,0000,,I'll do it in white.
Dialogue: 0,0:02:31.99,0:02:33.41,Default,,0000,0000,0000,,It could look\Nsomething like this.
Dialogue: 0,0:02:33.41,0:02:36.16,Default,,0000,0000,0000,,I'll do it as a dotted line, it\Nmakes it a little bit easier.
Dialogue: 0,0:02:36.16,0:02:37.80,Default,,0000,0000,0000,,So let me draw it like this.
Dialogue: 0,0:02:37.80,0:02:41.16,Default,,0000,0000,0000,,So let's say I'm\Nindifferent between any
Dialogue: 0,0:02:41.16,0:02:44.27,Default,,0000,0000,0000,,of these points, any of those\Npoints right over there.
Dialogue: 0,0:02:44.27,0:02:45.77,Default,,0000,0000,0000,,Let me draw it a\Nlittle bit better.
Dialogue: 0,0:02:45.77,0:02:49.71,Default,,0000,0000,0000,,So between any of these\Npoints right over there.
Dialogue: 0,0:02:49.71,0:02:52.65,Default,,0000,0000,0000,,So for example, I could\Nhave 18 bars of chocolate
Dialogue: 0,0:02:52.65,0:02:57.90,Default,,0000,0000,0000,,and 1 pound of fruit,\Nor I could have--
Dialogue: 0,0:02:57.90,0:03:00.42,Default,,0000,0000,0000,,let's say that is\N4 bars of chocolate
Dialogue: 0,0:03:00.42,0:03:05.62,Default,,0000,0000,0000,,and roughly 8 pounds of fruit.
Dialogue: 0,0:03:05.62,0:03:06.55,Default,,0000,0000,0000,,I'm indifferent.
Dialogue: 0,0:03:06.55,0:03:09.50,Default,,0000,0000,0000,,I get the same\Nexact total utility.
Dialogue: 0,0:03:09.50,0:03:12.42,Default,,0000,0000,0000,,Now, am I maximizing\Nmy total utility
Dialogue: 0,0:03:12.42,0:03:14.41,Default,,0000,0000,0000,,at either of those points?
Dialogue: 0,0:03:14.41,0:03:16.37,Default,,0000,0000,0000,,Well, we've already\Nseen that anything
Dialogue: 0,0:03:16.37,0:03:18.20,Default,,0000,0000,0000,,to the top right\Nof our indifference
Dialogue: 0,0:03:18.20,0:03:20.87,Default,,0000,0000,0000,,curve of this white curve right\Nover here-- let me label this.
Dialogue: 0,0:03:20.87,0:03:24.24,Default,,0000,0000,0000,,This is our indifference curve.
Dialogue: 0,0:03:24.24,0:03:26.45,Default,,0000,0000,0000,,Everything to the top right\Nof our indifference curve
Dialogue: 0,0:03:26.45,0:03:27.28,Default,,0000,0000,0000,,is preferable.
Dialogue: 0,0:03:27.28,0:03:29.34,Default,,0000,0000,0000,,We're going to get\Nmore total utility.
Dialogue: 0,0:03:29.34,0:03:31.25,Default,,0000,0000,0000,,So let me color that in.
Dialogue: 0,0:03:31.25,0:03:34.72,Default,,0000,0000,0000,,So everything to the top right\Nof our indifference curve
Dialogue: 0,0:03:34.72,0:03:35.93,Default,,0000,0000,0000,,is going to be preferable.
Dialogue: 0,0:03:35.93,0:03:37.73,Default,,0000,0000,0000,,So all of these other\Npoints on our budget
Dialogue: 0,0:03:37.73,0:03:39.60,Default,,0000,0000,0000,,line, even a few points\Nbelow or budget line,
Dialogue: 0,0:03:39.60,0:03:42.66,Default,,0000,0000,0000,,where we would actually\Nsave money, are preferable.
Dialogue: 0,0:03:42.66,0:03:45.66,Default,,0000,0000,0000,,So either of these\Npoints are not
Dialogue: 0,0:03:45.66,0:03:47.55,Default,,0000,0000,0000,,going to maximize\Nour total utility.
Dialogue: 0,0:03:47.55,0:03:50.28,Default,,0000,0000,0000,,We can maximize or total utility\Nat all of these other points
Dialogue: 0,0:03:50.28,0:03:52.57,Default,,0000,0000,0000,,in between, along\Nour budget line.
Dialogue: 0,0:03:52.57,0:03:55.14,Default,,0000,0000,0000,,So to actually maximize\Nour total utility
Dialogue: 0,0:03:55.14,0:03:58.30,Default,,0000,0000,0000,,what we want to do is find\Na point on our budget line
Dialogue: 0,0:03:58.30,0:04:03.86,Default,,0000,0000,0000,,that is just tangent, that\Nexactly touches at exactly one
Dialogue: 0,0:04:03.86,0:04:05.82,Default,,0000,0000,0000,,point one of our\Nindifference curves.
Dialogue: 0,0:04:05.82,0:04:07.56,Default,,0000,0000,0000,,We could have an infinite\Nnumber of indifference curves.
Dialogue: 0,0:04:07.56,0:04:08.64,Default,,0000,0000,0000,,There could be another\Nindifference curve
Dialogue: 0,0:04:08.64,0:04:09.51,Default,,0000,0000,0000,,that looks like that.
Dialogue: 0,0:04:09.51,0:04:10.45,Default,,0000,0000,0000,,There could be another\Nindifferent curve
Dialogue: 0,0:04:10.45,0:04:11.50,Default,,0000,0000,0000,,that looks like that.
Dialogue: 0,0:04:11.50,0:04:13.96,Default,,0000,0000,0000,,All that says is that we are\Nindifferent between any points
Dialogue: 0,0:04:13.96,0:04:14.86,Default,,0000,0000,0000,,on this curve.
Dialogue: 0,0:04:14.86,0:04:18.26,Default,,0000,0000,0000,,And so there is an indifference\Ncurve that touches exactly
Dialogue: 0,0:04:18.26,0:04:21.79,Default,,0000,0000,0000,,this budget line, or exactly\Ntouches the line at one point.
Dialogue: 0,0:04:21.79,0:04:23.50,Default,,0000,0000,0000,,And so I might have\Nan indifference curve
Dialogue: 0,0:04:23.50,0:04:25.53,Default,,0000,0000,0000,,that looks like this.
Dialogue: 0,0:04:25.53,0:04:29.23,Default,,0000,0000,0000,,Let me do this in a\Nvibrant color, in magenta.
Dialogue: 0,0:04:29.23,0:04:32.61,Default,,0000,0000,0000,,So I could have an indifference\Ncurve that looks like this.
Dialogue: 0,0:04:32.61,0:04:36.28,Default,,0000,0000,0000,,And because it's tangent, it\Ntouches at exactly one point.
Dialogue: 0,0:04:36.28,0:04:38.41,Default,,0000,0000,0000,,And also the slope of\Nmy indifference curve,
Dialogue: 0,0:04:38.41,0:04:40.12,Default,,0000,0000,0000,,which we've learned\Nwas the marginal rate
Dialogue: 0,0:04:40.12,0:04:45.62,Default,,0000,0000,0000,,of substitution, is the exact\Nsame as the slope of our budget
Dialogue: 0,0:04:45.62,0:04:47.32,Default,,0000,0000,0000,,line right over there,\Nwhich we learned
Dialogue: 0,0:04:47.32,0:04:49.44,Default,,0000,0000,0000,,earlier was the relative price.
Dialogue: 0,0:04:49.44,0:04:53.69,Default,,0000,0000,0000,,So this right about here\Nis the optimal allocation
Dialogue: 0,0:04:53.69,0:04:55.78,Default,,0000,0000,0000,,on our budget line.
Dialogue: 0,0:04:55.78,0:04:57.26,Default,,0000,0000,0000,,That right here is optimal.
Dialogue: 0,0:04:57.26,0:04:59.12,Default,,0000,0000,0000,,And how do we know\Nit is optimal?
Dialogue: 0,0:04:59.12,0:05:01.75,Default,,0000,0000,0000,,Well, there is no other\Npoint on the budget line
Dialogue: 0,0:05:01.75,0:05:03.09,Default,,0000,0000,0000,,that is to the top right.
Dialogue: 0,0:05:03.09,0:05:07.34,Default,,0000,0000,0000,,In fact, every other\Npoint on our budget line
Dialogue: 0,0:05:07.34,0:05:10.20,Default,,0000,0000,0000,,is to the bottom left of\Nthis indifference curve.
Dialogue: 0,0:05:10.20,0:05:14.74,Default,,0000,0000,0000,,So every other point on our\Nbudget line is not preferable.
Dialogue: 0,0:05:14.74,0:05:18.71,Default,,0000,0000,0000,,So remember, everything\Nbelow an indifference curve--
Dialogue: 0,0:05:18.71,0:05:19.84,Default,,0000,0000,0000,,so all of this shaded area.
Dialogue: 0,0:05:19.84,0:05:21.46,Default,,0000,0000,0000,,Let me actually do\Nit in another color.
Dialogue: 0,0:05:21.46,0:05:23.38,Default,,0000,0000,0000,,Because indifference\Ncurve, we are different.
Dialogue: 0,0:05:23.38,0:05:25.46,Default,,0000,0000,0000,,But everything below an\Nindifference curve, so all
Dialogue: 0,0:05:25.46,0:05:29.37,Default,,0000,0000,0000,,of this area in green,\Nis not preferable.
Dialogue: 0,0:05:29.37,0:05:31.48,Default,,0000,0000,0000,,And every other point\Non the budget line
Dialogue: 0,0:05:31.48,0:05:35.09,Default,,0000,0000,0000,,is not preferable to that\Npoint right over there.
Dialogue: 0,0:05:35.09,0:05:37.51,Default,,0000,0000,0000,,Because that's the only point--\Nor I guess you could say,
Dialogue: 0,0:05:37.51,0:05:39.01,Default,,0000,0000,0000,,every other point\Non our budget line
Dialogue: 0,0:05:39.01,0:05:43.27,Default,,0000,0000,0000,,is not preferable to the points\Non the indifference curve.
Dialogue: 0,0:05:43.27,0:05:46.26,Default,,0000,0000,0000,,So they're also not preferable\Nto that point right over there
Dialogue: 0,0:05:46.26,0:05:49.57,Default,,0000,0000,0000,,which actually is on\Nthe indifference curve.
Dialogue: 0,0:05:49.57,0:05:51.88,Default,,0000,0000,0000,,Now, let's think\Nabout what happens.
Dialogue: 0,0:05:51.88,0:05:55.31,Default,,0000,0000,0000,,Let's think about what\Nhappens if the price of fruit
Dialogue: 0,0:05:55.31,0:05:56.48,Default,,0000,0000,0000,,were to go down.
Dialogue: 0,0:05:56.48,0:06:04.79,Default,,0000,0000,0000,,So the price of fruit were to\Ngo from $2 to $1 per pound.
Dialogue: 0,0:06:04.79,0:06:07.61,Default,,0000,0000,0000,,So if the price of fruit\Nwent from $2 to $1, then
Dialogue: 0,0:06:07.61,0:06:09.79,Default,,0000,0000,0000,,our actual budget line\Nwill look different.
Dialogue: 0,0:06:09.79,0:06:11.36,Default,,0000,0000,0000,,Our new budget line.
Dialogue: 0,0:06:11.36,0:06:13.07,Default,,0000,0000,0000,,I'll do it in blue,\Nwould look like this.
Dialogue: 0,0:06:13.07,0:06:14.18,Default,,0000,0000,0000,,If we spent all our\Nmoney on chocolate,
Dialogue: 0,0:06:14.18,0:06:15.28,Default,,0000,0000,0000,,we could buy 20 bars.
Dialogue: 0,0:06:15.28,0:06:18.04,Default,,0000,0000,0000,,If we spent all of our money\Non fruit at the new price,
Dialogue: 0,0:06:18.04,0:06:20.46,Default,,0000,0000,0000,,we could buy 20 pounds of fruit.
Dialogue: 0,0:06:20.46,0:06:25.12,Default,,0000,0000,0000,,So our new budget line would\Nlook something like that.
Dialogue: 0,0:06:28.09,0:06:29.84,Default,,0000,0000,0000,,So that is our new budget line.
Dialogue: 0,0:06:35.63,0:06:38.21,Default,,0000,0000,0000,,So now what would be\Nthe optimal allocation
Dialogue: 0,0:06:38.21,0:06:40.99,Default,,0000,0000,0000,,of our dollars or the best\Ncombination that we would buy?
Dialogue: 0,0:06:40.99,0:06:43.27,Default,,0000,0000,0000,,Well, we would do the\Nexact same exercise.
Dialogue: 0,0:06:43.27,0:06:46.03,Default,,0000,0000,0000,,We would, assuming\Nthat we had data
Dialogue: 0,0:06:46.03,0:06:48.28,Default,,0000,0000,0000,,on all of these\Nindifference curves,
Dialogue: 0,0:06:48.28,0:06:49.99,Default,,0000,0000,0000,,we would find the\Nindifference curve that
Dialogue: 0,0:06:49.99,0:06:53.52,Default,,0000,0000,0000,,is exactly tangent to\Nour new budget line.
Dialogue: 0,0:06:53.52,0:06:56.91,Default,,0000,0000,0000,,So let's say that this\Npoint right over here
Dialogue: 0,0:06:56.91,0:07:00.83,Default,,0000,0000,0000,,is exactly tangent to\Nanother indifference curve.
Dialogue: 0,0:07:00.83,0:07:01.98,Default,,0000,0000,0000,,So just like that.
Dialogue: 0,0:07:01.98,0:07:05.27,Default,,0000,0000,0000,,So there's another indifference\Ncurve that looks like that.
Dialogue: 0,0:07:05.27,0:07:07.18,Default,,0000,0000,0000,,Let me draw it a\Nlittle bit neater.
Dialogue: 0,0:07:07.18,0:07:10.91,Default,,0000,0000,0000,,So it looks something like that.
Dialogue: 0,0:07:10.91,0:07:13.89,Default,,0000,0000,0000,,And so based on how the price--\Nif we assume we have access
Dialogue: 0,0:07:13.89,0:07:16.98,Default,,0000,0000,0000,,to these many, many, many,\Nmany, many indifference curves,
Dialogue: 0,0:07:16.98,0:07:21.11,Default,,0000,0000,0000,,we can now see based\Non, all else equal,
Dialogue: 0,0:07:21.11,0:07:24.09,Default,,0000,0000,0000,,how a change in\Nthe price of fruit
Dialogue: 0,0:07:24.09,0:07:26.75,Default,,0000,0000,0000,,changed the quantity\Nof fruit we demanded.
Dialogue: 0,0:07:26.75,0:07:29.89,Default,,0000,0000,0000,,Because now our optimal spent\Nis this point on our new budget
Dialogue: 0,0:07:29.89,0:07:34.54,Default,,0000,0000,0000,,line which looks like it's\Nabout, well, give or take,
Dialogue: 0,0:07:34.54,0:07:36.81,Default,,0000,0000,0000,,about 10 pounds of fruit.
Dialogue: 0,0:07:36.81,0:07:39.64,Default,,0000,0000,0000,,So all of a sudden,\Nwhen we were-- so let's
Dialogue: 0,0:07:39.64,0:07:41.06,Default,,0000,0000,0000,,think about just the fruit.
Dialogue: 0,0:07:41.06,0:07:42.56,Default,,0000,0000,0000,,Everything else\Nwe're holding equal.
Dialogue: 0,0:07:42.56,0:07:47.03,Default,,0000,0000,0000,,So just the fruit, let's\Ndo, when the price was $2,
Dialogue: 0,0:07:47.03,0:07:50.60,Default,,0000,0000,0000,,the quantity demanded\Nwas 8 pounds.
Dialogue: 0,0:07:50.60,0:07:52.52,Default,,0000,0000,0000,,And now when the price\Nis $1, the quantity
Dialogue: 0,0:07:52.52,0:07:54.20,Default,,0000,0000,0000,,demanded is 10 pounds.
Dialogue: 0,0:07:54.20,0:07:55.58,Default,,0000,0000,0000,,And so what we're\Nactually doing,
Dialogue: 0,0:07:55.58,0:07:58.53,Default,,0000,0000,0000,,and once again, we're kind of\Nlooking at the exact same ideas
Dialogue: 0,0:07:58.53,0:07:59.65,Default,,0000,0000,0000,,from different directions.
Dialogue: 0,0:07:59.65,0:08:03.16,Default,,0000,0000,0000,,Before we looked at it in terms\Nof marginal utility per dollar
Dialogue: 0,0:08:03.16,0:08:05.13,Default,,0000,0000,0000,,and we thought about\Nhow you maximize it.
Dialogue: 0,0:08:05.13,0:08:07.19,Default,,0000,0000,0000,,And we were able to\Nchange the prices
Dialogue: 0,0:08:07.19,0:08:09.54,Default,,0000,0000,0000,,and then figure out and derive\Na demand curve from that.
Dialogue: 0,0:08:09.54,0:08:12.08,Default,,0000,0000,0000,,Here we're just looking at it\Nfrom a slightly different lens,
Dialogue: 0,0:08:12.08,0:08:14.86,Default,,0000,0000,0000,,but they really are\Nall of the same ideas.
Dialogue: 0,0:08:14.86,0:08:17.28,Default,,0000,0000,0000,,But by-- assuming\Nif we had access
Dialogue: 0,0:08:17.28,0:08:18.87,Default,,0000,0000,0000,,to a bunch of\Nindifference curves,
Dialogue: 0,0:08:18.87,0:08:22.88,Default,,0000,0000,0000,,we can see how a change in\Nprice changes our budget line.
Dialogue: 0,0:08:22.88,0:08:25.61,Default,,0000,0000,0000,,And how that would change\Nthe optimal quantity
Dialogue: 0,0:08:25.61,0:08:28.24,Default,,0000,0000,0000,,we would want of\Na given product.
Dialogue: 0,0:08:28.24,0:08:29.91,Default,,0000,0000,0000,,So for example, we\Ncould keep doing this
Dialogue: 0,0:08:29.91,0:08:32.43,Default,,0000,0000,0000,,and we could plot\Nour new demand curve.
Dialogue: 0,0:08:32.43,0:08:34.22,Default,,0000,0000,0000,,So I could do a demand\Ncurve now for fruit.
Dialogue: 0,0:08:34.22,0:08:36.73,Default,,0000,0000,0000,,At least I have two points\Non that demand curve.
Dialogue: 0,0:08:36.73,0:08:39.01,Default,,0000,0000,0000,,So if this is the\Nprice of fruit and this
Dialogue: 0,0:08:39.01,0:08:42.87,Default,,0000,0000,0000,,is the quantity demanded of\Nfruit, when the price is $2,
Dialogue: 0,0:08:42.87,0:08:44.40,Default,,0000,0000,0000,,the quantity demanded is 8.
Dialogue: 0,0:08:47.62,0:08:49.00,Default,,0000,0000,0000,,And when the price\Nis-- actually,
Dialogue: 0,0:08:49.00,0:08:50.61,Default,,0000,0000,0000,,let me do it a\Nlittle bit different.
Dialogue: 0,0:08:50.61,0:08:53.82,Default,,0000,0000,0000,,When the price is $2--\Nthese aren't to scale--
Dialogue: 0,0:08:53.82,0:08:56.90,Default,,0000,0000,0000,,the quantity demanded is 8.
Dialogue: 0,0:08:56.90,0:08:58.69,Default,,0000,0000,0000,,Actually let me\Ndo it here-- is 8.
Dialogue: 0,0:08:58.69,0:08:59.77,Default,,0000,0000,0000,,And these aren't to scale.
Dialogue: 0,0:08:59.77,0:09:03.71,Default,,0000,0000,0000,,But when the price is $1,\Nthe quantity demanded is 10.
Dialogue: 0,0:09:03.71,0:09:06.62,Default,,0000,0000,0000,,So $2, 8, the quantity\Ndemanded is 10.
Dialogue: 0,0:09:09.14,0:09:11.57,Default,,0000,0000,0000,,And so our demand curve,\Nthese are two points on it.
Dialogue: 0,0:09:11.57,0:09:14.01,Default,,0000,0000,0000,,But we could keep changing\Nit up assuming we had access
Dialogue: 0,0:09:14.01,0:09:15.63,Default,,0000,0000,0000,,to a bunch of\Nindifference curves.
Dialogue: 0,0:09:15.63,0:09:18.15,Default,,0000,0000,0000,,We could keep changing\Nit up and eventually plot
Dialogue: 0,0:09:18.15,0:09:23.64,Default,,0000,0000,0000,,our demand curve, that might\Nlook something like that.