I know!! Back in the years 2006 to 2010 - the time I went to college, this was never something I could think of!! • Back in 2006 to 2010, KZfaq already existed. (since 2005) However, when KZfaq first came out, it was mostly for entertainment purposes such as prank or rant videos. • I can never imagine a series of lecture videos from a professor can be found on KZfaq!!

Q Advantage KZfaq => Ivy League education For free! No tuition! Same lecture. Minus the "degree" Minus forever debt otherwise known as Student Loans! 2024 Q ❤

Thanks for the note! I'm very happy the videos are helping students everywhere!

Где вы учитесь? Мне он очень помог, я с Казгюу, Астана

​@@DrAzevedoEcon thank you so much for you videos. You are the best principles of Economics lecturer

on*

@@Hoangys en

@@Hoangys pp

Haha! Very happy to help!

So do I. Thank you sir😊😊😊

I'm glad to have helped!

Hey! Same here. Which college are you from?

@@divyanshiverma9172 I am from Miranda House . R u also from MH ?

@@shreoshitarapdar5775 LSR :)

@@divyanshiverma9172 Great ! Divided by campus united by DU 😂🙌🏻

Thanks! Glad to help!

You are very welcome! Glad you survived! :)

You're welcome!

Haha! Thanks!

It's an honor to have to watch the video! Glad to help!

You're right. They're quite easier than reading a textbook.

Glad to help!

You're welcome!

Thank you!

The PPF will be linear when the goods on each axis are produced using the same inputs and technology. An example would be red shirts and blue shirts. The PPF will be bowed out when the inputs and technology that are used to produce the two goods are different....an example would be sandwiches and tires.

​@@DrAzevedoEcon It is totally clear now. Thanks a lot

Thanks for watching!

I guess what a zero sum game basically means is that for one to make money , the other one has to lose money !

👍

Thank you! Thanks for watching!

Thanks!

You're welcome!!

Good question. If the price was at one endpoint or the other, then one person would not benefit from trade. For example, if the proposed trade was 1 ounce of meat for 2 ounces of potatoes, then the Rancher would not benefit from trade. It would cost the Rancher 2 ounces of potatoes to produce each ounce of meat and the Farmer is paying exactly that....the Rancher is not better off by trading.

@@DrAzevedoEcon Ah, that makes sense. Thank you!! Love your videos :)

Thanks!

​@@DrAzevedoEconI must confess, I don't seem to get the question and your explanation here. Thank you Dr.

@@ubongetim5102 The range of prices that would result in gains from trade is one ounce of meat for anything between 2 and 4 ounces of potatoes. This is why the trade I use in the example (1 ounce of meat for 3 ounces of potatoes) works. The farmer is happy with the trade because the opportunity cost of producing an ounce of meat for the farmer is 4 ounces of potatoes. The trade allows the farmer to get it for only 3 ounces of potatoes. They can buy meat for less than it would cost them to make it themselves. The rancher is also happy with the trade because each ounce of meat costs the rancher 2 ounces of potatoes to produce. The rancher can sell each ounce of meat for 3 ounces of potatoes. They can sell meat for more than it costs them to produce it. So both the farmer and rancher are made better off by the trade of 1 ounce of meat for 3 ounces of potatoes. The question asks about what would happen if the trade was at either extreme (1 ounce of meat for 2 ounces of potatoes or 1 ounce of meat for 4 ounces of potatoes). In this case, only one person would gain from the trade. The other person would not be hurt, but they would be indifferent between trading and not trading. I hope that helps.

The choice of having the Rancher produce 18 ounces of meat and 12 ounces of potatoes is somewhat arbitrary. Actually, the gains from trade would be even bigger in this problem if the Rancher specialized completely in meat. In the problems that I give my students on this model, I tell them to have each person specialize completely in the good for which they have the comparative advantage. The choice of the trade is similar. The trade in this problem is just one of an infinite number of trades that would make both people better off. This trade (5 ounces of meat for 15 ounces of potatoes) implies a price of 5/15 (or 1/3), which falls between the two opportunity costs. Any trade that implies a price between the two opportunity costs would create gains.

@@DrAzevedoEcon Thank you so much ☺

You're welcome!

This chapter is often included in both microeconomics and macroeconomics. The chapter looks at the benefits that people (and countries) can get from voluntary trade. That is of interest whether we are talking about micro (people interacting with other people, firms, etc.) or whether we are talking about macro (how economies function, interaction between countries, etc.).

@@DrAzevedoEcon Got it Thank You So Much Sir

​@@DrAzevedoEconcurrently I'm doing a course on International Trade. It's a separate course on it own. From Nigeria

@@ubongetim5102 Which textbook are you using for your International Trade class?

I use the book Principles of Economics by Mankiw.

Nahi hoga tumhare paas poisa. Humra Morzi hom nahi porhega

You're correct, but you've missed the point. The point of this particular video is to discuss and illustrate the sources of the gains from trade. If you want to see a more thorough discussion of the model that includes prices, take a look at the videos on the Ricardian Model in my playlist for International Economics. kzfaq.info/sun/PLTjEimbqDkpBxcrJl6t8c_87B8zYmr4Mh

@@DrAzevedoEcon Thanks for the reply. The point was that under capitalism the source of gains cannot come from trade like that of a barter economy. Within a barter system two different qualities (i.e. meat and potatoes) are exchanged directly, therefore making it possible for individuals to ‘gain’ through exchange. However, capitalism is defined as a system of production and exchange for profit. In other words, we now have a group of people who start with a given sum of money and end with a given sum of money. It’s no longer about trading different qualities but increasing the quantity of the same quality (money). And what would be the point of exchanging the same amount of money (i.e. $100 for $100)-who would gain from that trade? Therefore, the source of gains (profit) must be in the sphere of production not exchange. If you’re interested, both Piero Sraffa and Karl Marx have critiqued Ricardo on this issue.

@@coreyjones8273 Trade doesn't have to be goods for goods. If I take some money and exchange it for goods, that is also a trade. None of the conclusions that I come to are dependent on barter, and everything relates just fine to a capitalist system. I'm familiar with the criticisms....I don't find them persuasive.