Transcript for:
Overview of Basic Economic Concepts

okay guys hey guys welcome back to uh another live stream so today we'll be having a look at economics and uh initially what i'm gonna try to do is uh finish up chapter one chapter two and then chapter three you guys can see it's quite a lot uh but let's see what we can do so this is basically the syllabus for 2020 2021 in 2022 so it's quite recent and then uh these are the following chapters so in total in economics we have about six chapters so today i'm going to be doing half of the entire syllabus in igcc now if you're going to be doing the multiple choice um exam then we've already like learned about 15 questions from here if you do chapter 3. so we're going to start with um the basic economy problem now uh after this live stream ends i will send all of these notes to the website where you can find all these notes and then revise at your own time so we're going to start with the basic economy problem that is the chapter one and whenever you start uh with economics um i think this is the first thing that you do so we're gonna start by defining economics and then we'll move on to scarcity which is a very important aspect in economics so we're gonna start uh with what is economics now you can't follow along take your notebook and also you know make some short notes because this website where i'm getting all of these notes are very very um like trustable and you can get you can trust this website um to the max okay so all of this is legit um and i think let's just begin so we're gonna start with defining what is economics uh and this should be like one of the most easiest questions and now uh rarely do you get this asked but sometimes in the multiple choice questions you do get this asked so economics what is economics economics is a social science okay that describes okay the factors that determine the production distribution and consumptions of goods and services so you can see the source is uh wikipedia okay so this is wikipedia and it's also the definition that you can use in igcc and get it correct now initially when we start with uh economics in chapter one we look at the resources we look at why we need economics in our life we look at the day-to-day examples we look at the day-to-day uses and uh we see why economics is very helpful so we start up with what is resources because throughout economics um resources is always mentioned uh every time we always mention what resources are and uh therefore you know you need to know what resources are in economics so resources are basically inputs that are needed for the production of goods and services so later on we'll get to know why you know goods and services how is economics related to all these inputs and everything you'll get to know all of that soon okay so you need to know that um resources are simply inputs that are used in the production of goods and services now again uh if you have any question you can put it in the chat i will try to answer that life if you're watching this live and if you're not then uh again you know you can comment down below and i'll try to respond as quick as possible so resources are basically inputs and we know that and uh we'll come across resources throughout the entire economic syllabus okay we'll move on to scarcity scarcity is a lack of something and uh just from its definition even if you search on google what's cause it is you'll just simply get a lack of something okay and in this context in economics we're saying a lack of resources now uh let me quickly explain about scarcity okay so first of all in this world we have limited need some limited needs and wants okay for example let me just give you some examples for example the land okay the land we're currently building these buildings these houses these supermarkets these hospitals these shops all of these land all of the land or all of the places where something has been built on is limited okay now you can think about this this way okay so for how long will everything last okay okay for example you have a hospital next to your house that land is taken okay nothing else can be built over it okay maybe next to your house you have a supermarket nothing can be built next to that so all of the land around your house is taken and the only way you can get more land is to get to another place now in this world we don't have infinite places and that's where we come to economics okay and economics helps us you know wisely locate all of our natural resources so land being one of a very good example and also a fact of production that we will come across in this chapter later on which is a very very important topic too and it's one of the most basic topics okay then we move on to the economic good so basically scarcity let me just repeat that we also look at the economic problem all of this is economic problem so when you want to define what is an economic problem you have to mention scarcity you have to mention resources you have to mention economic and figures now it's not a must to mention economic and free goods but it's these resources and scarcity scarcity especially must be defined now uh we have something called economic agents and these are the people that decide the allocations of resources these are the people that decide okay yes you can build on this yes you can you know do this or a certain thing so these are called economic agents we'll come across that also like uh economic agents for example the government or uh you know private firms so those are all called economic agents let's move on to economic goods okay so we have two types of goods and uh i will define what a good is so what a good is is simply something that could be touched okay tangible items so we have goods and services we all know that differentiation uh goods simply you can touch them in services you can't touch them so let's give an example of each goods okay a good can be for example a desk okay where you study the desk it's a good okay why is it a good how can i classify it's a good a good is made from scotch resources okay those are actually called economy goods okay so economic goods are basically those goods that are made by scarce resources course resources as uh basically means that this is something that is limited okay a wood example is a good example for something that's limited okay in the long run of course you can plant trees and get but in economics we look at what we have you know we'll have to wait for 100 years for that tree to grow and then cut it down now humans cannot wait for 100 years just to you know make something and therefore we have to look at what we currently have and that's why economics looks at what we have right now in the present day and not what we will get in 100 years because in 100 years we might even have nothing okay so economics looks at what is available in the present day okay and economic goods are simply those goods there is constant supply meaning when you give them out there scars you can't make like unlimited uh you know paper or something like that okay unlimited phones you can't make that because the resources to make that product is scarce okay you don't have enough because there will be at one time okay where there won't be enough for example you can have uh minerals okay like gold do you think gold will be ever ever lasting no you can only discover them and we later on get to know that discovery of resources actually impacts the industry and economics so we look at all of that in this live stream this live stream is going to be very very long so i'm going to try to speed up the easy easy stuff okay so move on to free goods so i hope you understood the economy goods we move on to the free goods okay now three goods are those that are abundant in supply okay that means that there are unlimited okay now you might tell me okay what is unlimited okay these are stuff we call um renewable okay so if you do biology you should know this we have renewable we have non-renewable so renewable is simply something like sunlight okay sunlight will never finish okay it's a process of the earth and will never finish wind will never finish wind power that we generate is a free good okay then stuff like air you know we breathe air we don't pay for the air the air is not limited we have enough air we have enough oxygen so they are unlimited in supply okay so hopefully understood uh that hopefully understood the distinguish between a resource economic good and free good and now we move on to the factors of production a very common question also in the theory paper and also sometimes in the multiple choice questions so this initially if you are in school and you learn economics this is moreover the first topic uh you learn i believe and then you come on to the economic goods the free goods but depending on the teacher but uh i will move according to the syllabus so the syllabus first says okay factors of production then we do the factors of production now resources are called the factors of production from its name you can see production production basically means to make okay and these are the factors that affect that making okay if i want to make a if i want to make paper what are those factors that affect okay so that's what we say factors of production okay and for example the fact of production is land so we're going to start with land and to remember the factors of production i say sell okay s-e-l-l so sorry c e l n capital enterprise land and labor okay so this is a good good word to remember all the factors of productions i think they're called acronyms if i'm not wrong so c e l l that's how you remember them uh so that's that so let's start with land so all resources in the economy okay all of them in the economy which includes the on the surface under the surface like lakes rivers forests all of that anything that is on the earth is called latch so that's what we classify it as land okay and these things that are on the earth are limited okay they are a factor of production because they're limited okay because previously i gave you an example of land like the buildings this is where it comes into the factors of production okay we move on to the reward for land and um the reward for land is rent is received so basically what this means is that okay if i make a building okay and uh i'm getting rent from it how am i earning from that production i'm getting rent okay so uh everything in these four factors of production you're receiving something it's an income okay next up we look at the amount of land in existence okay so when we're looking at the factors of production number one we're going to look at the definition we're going to look at the reward we're going to look at the quality we're going to look at the quantity we're going to look at the mobility okay so we're going to look at those five factors in all of the factors of production and it's a must you know all those five factors because they can ask any like in some mcq questions they will ask you what is the reward for that what is the reward for labor or how is the quantity affected in that okay how is the quality affected in lag okay so when we look at the quantity okay when we look at the supply it has to be fixed okay you cannot get more more land you cannot produce land okay you can only expand that you can only buy to other places you cannot buy the you cannot make the land okay you cannot produce in a factory land okay you can't make space okay so the only way you can get this land is to buy and that in different areas not in the same area okay so we say that supply in land is fixed okay we move on to the quality of land and quality depends on the soil type so look at the soil type the fertility and weather so if you have learned um geography you should know uh the factors that affect the land and like you know in farming and all of that so it's typically the same soil type fertility weather and uh those more like geographically uh factors geography factors okay we move on to the mobility okay what is mobility mobility is simply the ease of the use okay the ease of changing the use okay that's what we call mobility okay so mobility is the ease of changing the use and the location okay so mobility is the ease okay that that's the main weather ease of changing its use or location so for land can i change its location okay think about it can i change the location no i can't change the location i cannot take you know this land and take it to somewhere else you know africa will always be africa america will always be america okay so i cannot change take africa all the way to uh south america for example or north america i cannot take antarctica to africa okay so this land can only be at one place but when we look at the use okay we can't change it okay i can destruct the building and make a hospital from the hospital i can make it an office building from the office building i can make a supermarket i'm changing its use okay and when we're changing only the use we're saying occupationally mobile okay so we have geographically and we have occupationally so number one land cannot move from different places so we say it's geographically immobile but you can change its use so it's occupationally mobile hopefully you understood that uh let's move on to labor okay labor is basically the human resources available in the economy okay this is the mental efforts and the physical efforts of workers okay the key word here is workers okay later on we get to know by capital where machineries come into the image but for now we're looking at workers okay this is the mental and physical effort of the worker and we stop by the reward because that's the most important and most asked question and we say that the reward for this is wages slash salary for example if i go as to be a doctor okay and my reward from being a doctor is getting a salary getting money that's my source of income okay and the supply of labor now is uh not like land but it actually affects so the first thing you need to know with this supply of labor is the numbers of workers available at the current time and the number of hours a worker will work okay so let's let's go each factor by factor so we're going to start with the number of workers that are available in my country for example or in the population or in so number one factor the population size okay if i have a big big population size what's gonna happen i'll have more workers right if i have a big population there'll be more workers willing to work okay that means my label will increase i'll have more labor okay next of all is the number of years of schooling okay now some countries you finish school at year 12 some countries you finish school and you're 13. some countries you know even after that like you can't work after university so there are many different types of requirements in different countries so if you have a smaller or lower school living age that means that you can work quicker like as soon as my schools are over everyone looks for jobs and that means the labor will increase so if my school living age is shorter then that means that more people are available for work we move on to the retirement age okay now retirement age is very important because some countries they even retire at 60 some countries they retire at 78. okay it all depends on the retirement age if if one country has a retirement age of about 80 years for example okay i'm not saying that's true but 80 years for example what that's gonna mean is that people are gonna work for almost 60 years okay 20 years maybe they leave from school 60 years of constant labor okay that means that there will be more labor and the supply will be more okay the more the workers the more the supply okay you need to understand that okay now i'll be right back and we're gonna have a small tiny break so i'll see you in just a minute okay sorry about that but we are back okay so where was i i was looking at the labor okay and i was looking particularly at the supply of labor and uh i was looking at the factors that affect the number of workers and the first one i talked about was population size and the number of schools and then i talked about retirement age and then finally now i'm going to age structure okay if there are a young population that means that they're more youth and that means there will be more workers okay and we move on to the attitude towards the working women some countries they say that women should not work okay and it's true when it still happens but now over time it is changing but some countries say that women should not work and if what that means is that there's going to be less labor so if there's more labor okay if someone accepts the women into the population into the labor force we say then there will be more labor the next factor is the number of hours they work okay in some countries they work for 12 hours some countries six hours some eight some nine so the longer they work the more the labor next up is the if you're doing part-time or full-time okay so if i'm doing part-time there'll be less sleep if i'm doing full-time there'll be more labor and then some countries it is a must to give them holidays okay maybe if you have more public holidays then you know it's gonna reduce the labor then we have the maternity paternity leaves that is biologically factors biological factors and no one can stop that but okay um it can change from country to country with the maternity leave some countries don't tolerate maybe only when you're like eight months pregnant six month fragments that's when you cannot believe but it depends again from day-to-day countries sorry from dated from time to time okay so it changes as new regulations are made and then finally uh length of six leaves so if i'm sick okay like right now good um maybe i say i'm sick you know the max they can give me maybe is that two weeks some countries could have one week some will give three weeks i'm gonna give one month okay so labor is affected in all sorts of ways like that then we move on to the quality of labor and quality of labor will depend on the skills the education and the qualification of labor then we move on to labor mobility and labor mobility you can depend on various factors okay labor can achieve high occupational mobile that simply means that you can change the use and they can also if they have the right skills and qualifications like from a doctor i can pick my engineer if i have the skills okay and um that is that okay but you cannot change it geographically hopefully okay so we move on okay uh sorry it is geographically mobile because you can change countries and then work there so it is geographically in a sort of way we then move on to capital okay capital these are basically man-made resources uh like machines and they help us in the factors of production the road for capital is called interest the supply of capital is depending on the demand if i want one sort of product it is because of capital maybe i want some more trips okay the machine will also help me um you know to make more of that we move on to the quality quality depends on the product you buy okay if my machine is high-end very expensive very good making nice quality cars then of course it is depending on the quad the goods you use to make the product and then when looking at the mobility it is geographically immobile you cannot change uh maybe a big machinery from place to place like office building you cannot change it to another location [Music] and when and uh on the other hand it can be uh occupationally mobile you can change it to use okay you can change a machine's use like from a delivery ban you can make it to an office ban for something else finally you move on to enterprise and enterprise is basically the ability to take risks and run a business venture of a firm which is called enterprise okay and uh basically ensures through the people who start a business entrepreneurs organize all the factors of production and they take risks decisions and necessary to make the fans run successfully the reward for enterprise is generated from the business so this is profit uh we're looking at the supply of enterprise it's dependent and is depending on the skills if you have very good skills then like innovation communication risk taking the supply would be more and uh when looking at the quality again it depends on how you satisfy the demand in the economy with your innovate voice or your uh good thinking and enterprise is both geographically and occupationally mobile okay i can change my business from one place to another and at the same time i can change its use through its book so the four factors of production they're done and i took a lot of time just explaining the full factors of production because they're very important in economics and now let's move on to the opportunity cost okay so after talked about uh the after talking about the full taxes of production the next thing you need to have a look at is opportunity cost okay opportunity cost simply okay what it means is that the scarcity of resources when they're not efficient okay that's when opportunity cost comes in okay when you need to make a decision is an opportunity cost comes into the picture okay now opportunity cost what is the definition of opportunity cost opportunity cost is the next best alternative that is sacrificed or foregone in order to satisfy the other okay that's the best definition i can give to you okay so if you make another decision that thing that you forgot is the opportunity cost okay not the one that you decided the one that you've forgotten that's what the opportunity cost is okay we move on to some examples on how like feminists think now i'm gonna take a lot of time on this because again it's more straightforward like a government if they want to make a public school or a public garden you know they'd say okay we need education so that means that you know we're going to take priority to the education so the good that's foregone is the public garden okay so same to a business should you decide to make crisps or soda if i decide to make soda then chris will be my opportunity cost okay now we move on to the production possibility curve and this is basically the maximum combination of two goods that can be produced by the economy with all the available resources with all the available resources if you don't have resources you can't produce anything so with only the available resources can you produce a certain number of goods so this is how a ppc curve looks the production possibility tells and you can see whenever it's inside the curve means that i'm producing all of the goods when it's outside we say it is to be um in sufficient inefficient because it's producing less than what it can potentially do and when it's in w we say that it is unattainable so w unattainable z inefficient unattainable because uh it is beyond the scope of the economy's existing resources now we need to look at factors that affect the curve to shift outwards and inwards okay so to shift outwards to move more decide okay the factors would be discover or develop new raw materials okay discover new raw materials when we're going uh sorry we're still gonna do outfits so when we're going upwards discover new um raw materials increase the technology increase the labor force labor force is getting more labor then we look at the inward shift when we're looking at the inward shift okay when we're looking at inward shift we're basically seeing natural disasters which remove the resources running out of resources or depletion of resources investment low investment in new technologies will lead to the inward shift and finally we have a look at how is the opportunity cost link to ppc now we use the ppc curve to decide okay if i move from good x if i go down you know what's gonna happen okay if i produce 1000 to 500 units you know what's going to happen so that's why we use ppc curve as to compare two goods and then we decide which one is the best okay so let's move on to the next chapter so we're done with the first chapter uh and now we're going to move on to the allocation of resources so economics is all about this basic economic problems and then uh all of this now this one right here is a big topic okay this topic covers demand supply and everything related to that what is an economy okay now an economy is an area where people and firms trade and consume goods okay so an economy is simply uh where the people and the firms produce trade and consume goods and services and can vary from size to size okay and this can vary from your local town to your country oh the globe itself so we start with microeconomics and then we move on to the macroeconomics uh this is also quite important to understand bitcoin between micro and macro because they can also ask you the users of what is the microeconomics the uses of microeconomics uses of macroeconomics so it's quite important to do that so let's start with the micro economics okay so we're going to start with the microeconomics and this is the study of individual markets so the main sort of idea right here is individual markets okay so this is the study of individual markets okay so microeconomics is the study of individual markets for example the effect of a price change on a demand of a good okay this is individual markets what do you mean by individual markets okay for example apple okay apple will analyze their products okay the iphone 12 is selling good okay that means that what are they gonna do produce more iphone 12s or get a better series of iphone 12 this is all related to the individual markets no one is interfering with how they're analyzing anything okay then we move on to macroeconomics and macroeconomics is the study of the entire economy okay the whole economy as a whole okay and who does the government okay the government is the person in charge the government or it's not a person but it's a whole like you know a whole group of people that decide on their economy okay so we have microeconomics that is the individual market and we have macroeconomics that is basically the whole entire economy we move on to the roles of markets in allocation of resources okay now here is where we come to the economic agents that i was previously mentioning okay uh when we looked at the scarcity uh sort of topic now resource allocation uh what is a resource allocation is simply when economies decide what goods and services to provide and how to produce them and to who to produce them for these are called economic agents uh they basically practice the economic agents uh so sorry they practice uh resource allocation so these economic agents will see okay um who are buying what particular percentage of this population is buying this good okay where should i give it to the villages you know maybe they don't have enough water okay so that's what we do that's how we can um show the how good and services are provided okay then we move on to um the question is that these economic agents um tell themselves okay so these economic agents tell themselves that okay um we first of all need to know what should i produce okay what should i produce would include something like what good can i produce okay uh for example should i produce food food for example like bread or should i produce water okay these economic agents will look okay do we need more water or do we need more bread okay so these economic agents analyze and then they look at how to analyze or how to allocate these resources okay so with the rules of the market the economic agents what to produce they keep these questions in mind what to produce how to produce so which type of active production should we use and for who to produce okay who should get this service the most okay maybe this village doesn't have enough water so they should get the product and this recall is the basic economic questions that every economic agent must encounter must think to themselves in the basic way they need to look at what to produce how to produce and for whom to produce let's move on to market okay and market is simply an arrangement that brings all the producers together and the consumers of a good or service so initially what this means is that they engage in exchange okay okay so why exchange okay so for example i have made a good and i have money i will trade my money with the good and that's what we call exchange now uh i i'm sure you've heard of the battery trade and that's where the system of money came in we'll also talk about money in chapter 3 actually look at how money is allocated look at borrowing factors we look at everything related to that so sorry about that um our way back okay so simply that's what a market is and um that's what we look at okay so it's simply how we exchange goods and services and then uh how the market works so the market simply produces consumers working together and they exchange um okay so let's move on uh and right here what it's saying is that goods and services are bought and sold in the market at an equilibrium price or demand and supply are equal okay and this is called the price mechanism so what is the price mechanism price mechanism is simply uh when the demand and supply are equal okay and this basically the price mechanism helps us answer the three basic economic questions producers will produce the good that consumers will demand the most then we move on okay we move on we move on to demand demand very very popular topic okay demand what is demand from its name okay demand is simply what you want okay even in english when they say i demand for this it means that i want this okay i am willing to do whatever for that thing okay i demand you sit down okay for example that's a bit like more harsh but uh i demand that means that i want you to and i'm willing to do anything to do that now that's uh kind of like the english way and uh i'm gonna compare that with the comics okay so economics demand is simply the want and the willingness of a consumer to buy a good service at any given price okay so if i have enough money if i have 30 million um or sorry that's a bit too much if i have one million dollars okay and i demand to buy a palace if i have that in i have enough money and i am willing and i have that ability okay sometimes they say demand is the ability okay so it is the ability also to buy a given price of a given period of time because okay i want i want to demand anything but i don't have the ability to do that okay so with demand you need to also look at that in perspective of ability because if you don't have the ability to do that then i mean you can't do anything okay so demand is the want and the willingness of consumers to buy a good service at a given price okay so that's the definition you can write that down if you're watching this life and uh if not that's a really good definition of demand um and then we come to what is effective demand and uh this is where basically where the willingness to buy is backed up by the ability to pay okay there you go that's called effective demand effective demand okay maybe i have demand okay but i don't have effective demand maybe okay i want to buy a palace but i do do i have the ability to buy that palace maybe not okay when you don't have money we say that is effective demand um but you maybe want it okay so that's more for want uh but not technically so we call that effective demand we move on um when you have effective demand for a good service we say that's quantity demanded okay so for example i have effective demand on us palace okay that would basically mean that that palace will be a quantity demanded so hopefully you are understanding what demand means and uh it's quite simple simple example economics it's a very very popular topic um to be talked about and at the same time uh you know sometimes some students don't even understand what the models and you know demand even the definition this comes from its name okay you know demand is like an english word and unlike me know biological terms that's why i don't really like biology you know you just need to know that one but with economics you have to reason okay that's the only way you can get out of it so uh individual demand what is individual demand this is demand from one consumer while pocket demand for a product is the total aggregate and demand for the product okay so we have individual demand this is when uh one person demands for something or maybe one demand from one consumer and when we say market demand it's when the total country total nation or the percentage or the you can say how much how much percent of the population are willing to buy this okay for example um yeah so it's the sum of all the individual demands together which gives us the market amount so it's important to know that so we have talked about effective demand we've talked about uh the market demand and we've talked about the individual demand and then also uh we talked about quantity demanded and we gave the definition of demand so we've done a lot and now we come to the law of demand the law of demand is very very easy and this states that an increase in the price will lead to a decrease in demand and a decrease in price will lead to a decrease in demand and of course that applies for the reverse uh i just said the reverse but okay if you know an increase in price leads to decrease in the bond then vice versa okay uh satirist purpose uh let me use my complex english words okay so um we will have a breakout one hour so if you're watching this live uh you know i'll give you a break because you know effective learning you know you can't just do that for eight hours okay or something like that because this topic is very very very long so let's see how long it's going to take us to finish it so let's move on to um that the diagrams and uh here you can see we have the price we have the quantity demanded okay so you can see the price quantity demanded and uh this is maybe a demand curve for coca-cola okay and uh when there's a decrease in price what's happening degrees in price increasing quantity you can see if i decrease the price from a to b that means that i'm increasing the quant demand quantity sorry quantitative so the demand curve will always run from the top to the bottom and the supply curve later we'll get to know we'll always run from the uh okay both of them run from the top to bottom but this one runs from the left to right and that one from the right to left okay now let's look at something called um extension in contraction okay now an extension is simply when uh there is an increase in the bond because of the prices so when there's increased demand we say extension and there's a decrease in demand we see contraction okay so it's quite simple then we look at shifts to the left and shift to the right now this is a big big topic as you guys can see there's a lot to discuss about this okay so we move on to shift to the right and then shift to the left so shift to the right you can tell is from a to b so to the right okay why would something shift to the right now a rising in demand for a product due to the changes in other factors due to the changes other factors have you have you heard that right due to the changes in other factors okay uh excluding price causes the demand curve to shift to the right so when the demand rises because of the factors okay because of the other factors excluding price okay so without price not no price okay then we say shift to the right okay we don't say price because it's part of the curve you know it's part of the y-axis so we don't count it that way okay and uh but price is a factor we'll later get on to that uh and then shift to the left is the opposite fall in demand because of factors excluding the price that will uh lead to a shift to the left okay now let's move on to the causes of a shift in a demand curve why would something shift to the right why would something shift to the left okay so we stop consumers income okay this is my personal income and if i get more money what will that result you know me having the ability to buy more products me having the ability to demand more and me having the ability to demand more will result to more demand okay which will result to a shift in right okay so it's like a sort of chain you know i've had income i've increased my income increase in income will lead me to having the ability to demand that would have mere ability to get more uh demand and that would increase my demand and therefore that will shift to the right next up it also applies for um the opposite so if i have a reduction in my income uh maybe due to tax okay yeah it's coming up down here so right here tax so that's consume incomes and then we move on to tax incomes so tax incomes basically means that a rising tax on income means a less demand okay so if i have more tax that means that will be less than one right and the same for the other so if i have low tax then i'll have more income to use therefore more demand therefore shift to the right we then move on to the price of substitute substitutes are basically goods that can be used instead of particular good uh they can be called alternatives uh so for example an example is coffee and tea now so of course some people will hate me saying this but coffee and tea are similar so if maybe coffee the price increases then you know i just go to the to the tea okay and you know that effects are rising the price of one of the substitutes really terrorizing the product for the other one okay and that will shift to the right so if coffee's price increases i'll shift to the other good because it's cheaper you know uh it's a human nature to want the cheaper one right cheaper but good you know i'm not saying that uh if if coffee rises t is bad i like to so you know why i spend more money i just go for the tea then we move on to price complements so complementary goods so we cut we say these are complementary goods complementary goods are stuff that go along with one of the goods for example a printer in an ink or petroleum fuel a petrol in a car fuel in a car um and so on so forth okay so a rise in a price of one of the complementary good will reduce the demand for the particular product okay so this will shift to the left okay uh so for example there's a rise in the price of the printer this will reduce the demand for the other product okay because it's too expensive uh maybe if i want to buy a car but it's too expensive what will that mean i will not buy the car and if i don't have a car why would i want fuel so the fuel will also go down okay uh also when people don't buy a car when the fuel rates are very high so it's all like because of complementary goods then uh we move on change in consumers taste okay so for example you know there was one time fidget spinners was a big deal you know when they were fidget spinners if uh you know um everyone was just having fidget spinners or maybe like those pokemon cards that are currently like you know we've seen those videos right the pokemon cards now are a big value and uh you know when there's a new fashion or when there's a new case okay the product that will is there a current that is very fashionable will increase its demand okay which will shift to the right so remember increasing the bond shift to the right decreasing demand shift to the left okay then we move on to the degree of advertising now you know the reason of advertising is like you know no for example you go to youtube you know the ads you always see the same same ads again and again is that true like you always see them again and again or like ads that say play this game play this game play this game and eventually at one point we'll be like okay let's just give it a try and once when you give it a try then you get addicted to that game and they have made a profit so because of that advertising that particular product will then shoot up and the demand will increase and that will lead to a shift to the right but when you have low advertising no one knows about your product there'll be no demand for that product will then shift to the left okay so hopefully you understand all of this okay and um so that is all the factors that affect um the following so that's all the factors that affect uh demand then we move on to supply okay so demand and supply liquid together and you can see how long this this chapter is then we have market price price changes we then have elasticity of demand uh we have a lot a lot so it's a it's going to be a long long livestream device so it's going to be then price elastic supply we're going to look at the market economic systems advantages disadvantages okay and then finally we'll move on to the next chapter and some chapters are really short so we're going to be scared um we'll get we'll get there okay uh this is actually the best video to watch for last minute revision uh at least for the three chapters okay it's because i'm literally brushing up everything related to economics in these three chapters so after this live stream you have learnt a lot i hope um you'll be able to answer 50 of the paper because the six chapters we've learned three chapters so if you do the math 50 okay and again we'll take a break at one hour so you don't you don't get tired so in about like eight minutes uh we will take some uh we will take a break okay let's move on to these uh we'll have a five minute break if you were wondering um again because i've been talking for like one hour and at the same time you've been listening for one hour so i understand that so we'll have a small break and then we'll move on to um the rest okay so at least let's introduce supply okay because the monitor i go together you know we will come across like you'll have the demand curve and the supply curve okay together so we move on to supply supply is the want and willingness just like the mod but this time of producers to supply a good or service at a given price you know for demand it was of a consumer to buy not to supply to buy a goods or service at a given price but in this case it is for the producers to supply a good service at the given price okay so uh hopefully you understand that and uh then we look at the amount of goods and services uh producers are willing to make and supply is called quantity supplied okay what is this called is called quantity supplied so the amount i'm making is called the quantity supplied okay for the other one it was quantity demanded for how much i'm demanding it's called quantity demanded so hopefully you understand that um i really hope you understand that if there's any questions put in the live chat and if you're watching this as a normal video then you can put it up in the comments okay so the law of supply what is the law of supply the law of supply is states that an increase in a price when the price increases this will lead to an increase in supply okay so the other one you were saying then the increase in price will lead to a decrease in demand right and this one says that an increase in price will lead to an increase in supply now let me teach you why this happens okay let's give an example because economics makes most sense when i give examples i have a car okay and that car for example the bugatti that car is increasing in price okay and as a producer what do you want money you want profit okay you want the maximum money to do with the lowest production to tank for example okay my machines will make that car and i'm getting a lot of money for that the first thing that will come to me make that car because first of all i'm getting a lot of the price and i can maybe make that uh product in a very short time what will that mean that i am simply um increasing the supply okay i'm increasing the supply because the uh because of the increase in the price okay because of the increase in price i'm increasing the supply and this will also work for the other one other way around if there's a decrease in the price why should i even make it you know if there's a i'm getting a very low return of the product why should i even produce it you know i should focus on the big products so hopefully you understand that okay and uh it's quite important let's move on to the curve so you can see from this curve it's right to left in the demand curve it's from uh left to right so it's quite important to know that because in the exam if you switch them up you're going to get them wrong okay and this one says that if i go up if i increase the price quantity supplied will also increase okay so yeah and this also applies for the extension and contraction when there is an increase in supply there will be um when there's an increase in supply we say it's an extension and when there is a decrease in supply we say subcontraction okay so increase in supply extension decreasing supply contraction okay we move on a rise in the supply for a product due to the factors um so the rising up supply of a product these are the factors excluding the price will cause the ships the right to similar to the demanded definition the for the shift so it's a very similar uh concept except this one is supply instead of demand right now let's have a look at the factors that affect um you know supply start with changes in the cost of production okay so this is a it's a quite important um sort of topic so when my cost of production is cheap okay when it's very cheap when i can make this car at a very cheap price that means i'll have more profit or maybe the government has given me a subsidy a subsidy is basically a fund that is given so that it can reduce the production cost okay and can promote that so for example books okay books industry maybe the government says okay take this amount of money to produce more goods because we want to promote that okay that will mean that um this government is given a subsidy so that'll reduce the production and therefore you would make more supply okay you'd supply it more the next one is changing in the quantity of resources available when there's more resources that means i can easily make the product but because you know now we know that if we have limited stuff limited edition it's more expensive so therefore that will reduce the supply then we move on to technical changes if there's better technology at a cheaper price then we can make more stuff more products at a cheaper price and that will give us more income okay and then we move on to profitability of other products if one certain product is seen to be more profitable than the current one if that is being produced then they will shift it okay so for example i'm making crisps and then soda okay and now i'm maybe i'm sorry i'm producing only soda and you can see scripts are at the same production like price and i'm getting more income i'd shift to crisps okay so depending on the profitability of other products i will change my production so the supply of the initial product will reduce and that will cause a shift to the left but the new product that i shift to will increase so that will of course increase the thing and uh we have other factors like whether natural disasters wars they can all shift to the left okay so those are the factors affecting supply so you can see they are quite literally only about five uh but four main you can see the ones that are on both so we looked at all the curves we looked at the production sorry we looked at the extra uh what do you call it the extension and the contraction for both demand and supply so next up we'll look at a market price after the small sort of break that i'm gonna give you guys of let's say about 10 minutes or maybe five minutes so we'll do that but we'll see maybe about five minutes i'm gonna give a break of five minutes so you can freshen up and then we can because uh we can start the live stream once again talking about market price and then we look at the price changes and the elasticity loss which is really important also look at elasticity of demand lost the city of supply and uh so on so forth so the next thing we're going to look at is equilibrium disequilibrium and everything related to market price i'm going to explain everything in just a second after this break off this five minutes so i will see you after five minutes okay so see you after five minutes okay so hopefully you've had your break and uh we're gonna start to continue now hopefully you had a sip of water and you're ready to begin again okay so market price um let's start with that so we let's just have a recap of what we just talked about so we talked about demand we talked about supply and now we're gonna have a look at the market price okay so let's have a look at that okay so with marketplace what we're mainly looking at is the market equilibrium price okay what what is this and what is this equilibrium price okay so that's what we're going to be mainly focusing on okay so that's what we're going to be having a look at so equilibrium price okay so the equilibrium price is the price at which the demand and the supply curves they meet okay so this is my demand curve remember to shift uh it's from the left to right and this is my supply curve so this is my supply curve and the supply curve is from right to left okay going downwards both of them will adapt if you want to see it like this okay now equilibrium price is this point where they meet okay where the meat is what we call the equilibrium price okay this is when the demand is equal to the supply that's what we call equilibrium price the disequilibrium price is when the demand and the supply curves do not meet okay maybe when demand is more or when supplies less basically they don't meet at a given point okay and that's what we call this equilibrium okay so this is when the demand curve doesn't meet the supply curve and simple types okay so let's move on and let's talk about the price changes okay when i do this what happens to the equilibrium price okay so in this diagram two disequilibrium prices are marked 2.5 and 1.5 so 2.5 right here sorry 2.5 and 1.5 right 2.5 and 1.5 okay for example this is 2.5 this was and then this is 1.5 at this point no they're not meeting the the only point they meet is in the center right here is that right and at 2.5 the demand is 4 while the supply is 10. 2.5 what happened if uh four and ten okay four uh two point five and one point five it's ten there is excess supply relative to demand okay so there when i'm producing this and then i'm producing this okay with the soap with the supply you can see it's increasing by 10 but i'm producing 2.5 but with 1.5 i'm only producing four okay so when the price is above the equilibrium price when sorry when the price is above the equilibrium price a surplus is it is experienced when this 2.5 is above this equilibrium price right here when it is above the equilibrium sort of line when the two are together whatever is above it okay we say that it is a surplus okay it's a surplus surplus even in english means that is it increased so i don't know if i can show you guys um but uh i don't know if you guys are able to see this are you guys able to see this i think you should be oh or not uh yeah okay whatever so you can see a surplus describes the amount in asset or resource exceeds the portion okay and you can see some diagrams right here i'm not sure can you guys see uh well now let me just move on my move my coming to uh that side so i uh i think you guys are able to see right now so we have the surplus which basically is describes the amount of an acetyl resource that exceeds the potion that's activate uh actively used okay so you can see so many diagrams here it's above okay so it's above so let's just keep that back to the center um so let's just move that back to the center so that is what we call a surplus and again in english we have shortage okay and a shortage then would be when it's below the equilibrium price okay so that's quite uh simple okay and let's now move on to the price elasticity of demand simple terms it's called the ped okay the ped of a product simply is the responsiveness of the quantity demanded quantity demanded to the changing price when i change the price what is that response i'm getting okay when i change the price of coca-cola what is that return i'm getting what is that responsiveness i'm getting okay that's what we call the price elasticity of the month okay now we have a formula here where it shows the change in quantity demanded over the change in price is how we calculated uh or how we calculate the p d p e d okay for example calculate the price elasticity of demand of coca-cola from the diagram okay so what you look at is okay from 500 to 300 and remember to calculate change you'll do new price minus original price over the original price so my new price is 500 for example so 500 uh the old price so the original price over 300 over 300 now you take your calculator fit this and do times 100 okay uh if you do that times 100 you would get your sort of answer and then after that you do the quantity over the price so hopefully everything is making sense now and um yeah so a change in price which makes a higher change in quantity demanded these products have a price elastic demand okay so now we're gonna have a look at elasticity okay so uh elasticity of the curve okay so that's where we're looking at okay so when a price makes a higher change in the quantity demanded so when i change the price the demand is more okay we say that the price elastic jump on we say that the product has a price elastic demand and their values of the ped is always above one okay so when like when you calculate the ped it's always above one okay so this is when i change the price and this results to a higher change in the quantity demanded change in price leads to higher change in quantity and uh same would apply when uh something is inelastic demand the change in price will make a smaller change in demand in the change of quantity demanded so you can see this right here shows inelasticity okay and this curve right here shows unitary okay when there's a change in the demand and the price is equal and the change in amount of 10 will also equal to the other 10 percent of change so when they're equal we say this is called unitary price velocity demand so we've talked about elastic uh price elastic demand we've talked about inelastic demand and then now we've talked about unitary price elastic demand then we look at two other curves we have the infinitely price elastic demand this is when it is perpendicular to the x-axis we say that it is infinitely price elastic demand and when we say it is uh when it is vertical or when it is perpendicular to the y-axis we say that it is perfect price of elastic because it has no effect on the demand but with the infinitely it when the quantity of demand changes uh there will be no any change uh in the price itself so i when someone demands and i'm not done anything to it so for example like the fashion products okay now what affects ped so what if xpd now we're looking at the factors that affect the ped and the first one is the number of substitutes okay so the number of substitutes now if a product has a many substitute products uh it will have an elastic demand okay so if i have maybe this coca-cola and then there's a juice okay which is a sort of juice you have or maybe pepsi and mountain dew if pepsi's price increases they'll go to mountain dew okay because they're alternate goods okay and won't make a difference that means that um if i shift okay this will mean that because of the change in price there will be a great effect in its demand right because if the price rises then they'll move on to the substitute okay so that will mean that uh it's price elastic uh demand because the quantity will increase uh the quantity demanded will increase for the substitute we move on to the time period the time period is simply uh when demand for a product is more likely to be elastic in the long run okay so for example if the price rises consumers will search for a cheaper substitute okay and therefore the longer they have the more likely they are to find one so that's quite self-explanatory uh the next one is the proportion of income spend on the commodity now let's give an example here i have a pencil and i have a expensive laptop okay my income is hundred thousand dollars per yeah okay a laptop uh or okay let's let's give a pencil and a car okay the car is fifty thousand dollars it's taking half of my income if it is half my income okay then what will that result that will result to a high elasticity it will be very elastic because when the price of that will increase you know i i don't i will i will not buy it okay because it's taking too much proportion of my income but you know for example a pen or rice or water necessities you know i wouldn't even know the price increases for example a lollipop you don't even know that the price would increase okay because it's not even affecting your income it's very very small percentage off then income of your proportion of income now we have a look at the pd and the revenue how are they related how is the price elastic demand and the revenue related okay now producers calculate the ped of their product and take a suitable action to make the product more profitable so they basically do something so that they want you know their product to be more profitable now everyone does that okay they do something so that uh you know for example i can do something to my pen you know and then while everyone is like a damn you know it has a laser or something like that that will increase my profit but okay that's not a good example but um that's just some of the things so producers do something they call the ped so that they can do the action okay that's why we do we that's why we calculate ped okay and uh what is revenue revenue is the amount of money that a producer firm generates from the sales the total sales um is how we calculate or how we get the income okay we move on to if the product is found to have an elastic demand okay meaning um you know if the product has an elastic demand meaning uh when i change the price it'll have a great effect on the quantity demanded the producer can lower the prices to increase the revenue because if i reduce the price what do that mean you know it would be more people will buy okay but if i increase the price less people will buy okay because demand also there's law of demand comes into this we have all spent about the loft amount and if a product is inelastic in demand what will happen the producer can raise the prices to increase the revenue okay so when something is inelastic uh inelastic simply means that there's no effect for example a pen or rice necessities i need to get them so an increase in price will also increase their revenue right because i need them it's a necessity okay so hopefully you've understood past elastic um of demand process faster zero demand it can be a trippy tricky topic if you don't understand but if you understand in the first go re-watch that section where i talk about price elasticity of demand okay we move on to price elasticity of supply okay so now we're having a look at the price elasticity of supply pes okay and the pes is simply the responsiveness of its quantity supply the other one was quantity demanded this one is quantity supplied to its changes in price how do you calculate pes the same sort of formula changing quantity over change in price now just like ped ps can be categorized into price elastic supply price inelastic perfectly priced inelastic infinitely priced elastic and unitary price elastic okay so um it's similar to the the other diagrams it's just exactly the same so we are not going to be redrawing the um diagrams so you can check previously on how the diagrams look like so it will be similar now we'll have a look at the factors that affect this ps and the first one is the time of production okay if most products can be made quickly it's like the factors of supply if this product can be made quickly then it should have a price elastic supply because you know you can supply so quickly that will be priced elastic okay for example juices to restaurant um but products which take longer time to produce like a car will have price and elastic supply you wouldn't want to supply because it takes a lot of time and you need income as fast as possible okay uh the next one is availability of resources if you have more resources which are including the factors of production especially land labor capital uh this will make it to price elastic but uh remember elastic supply is when i change my supply or when there's a change in price um let's just take you to that uh basically uh let's go to pd and then i'll show you that so for the elastic so when there's a change in price it makes a high change in the in the supply okay so there's a big change in the supply so if like for example the price reduces there'll be a increase in the supply okay now we come to another big topic called market economic system okay market economic system now from its name uh we've talked about an economy the economy is basically the exchange of goods and services if you remember from a producer and consumer this is where we come to the market economic system okay it's similar to what we talked about the economy this time it's the economy system okay we'll look at the types of the economic systems okay so let's read this in a market economic system or a free market economic system all the resources are allocated by the market okay so all these resources are located by the market and private producers and consumers okay so we're first having a look at the market economic system or free market economic system okay so this is when all the resources are allocated by the market and this market i say meaning the private producers and the consumers okay so that is what i mean and uh there is very little government intervention or maybe no government intervention in the research allocation so this is all done by the producers and the consumers okay and um uh there are virtually no economies in the world that follow this system so it's quite irrelevant to even to learn this but for economics sake or to learn why we don't practice this we need to learn this okay and um however there is something uh there's a country called hong kong and singapore that come really close to this again in your free time you can check the index of economic freedom but it is um not relevant in igcc okay so you move on to the features okay the features we say all resources are owned and are located by private individuals so these resources are goods and services okay if you're wondering all these raw materials are owned by these private individuals by these businesses and the government can do nothing about anything related to the market they cannot say you know pollution or they cannot give anything taxes they cannot do anything like that they cannot provide any public goods okay they have no talk in this okay the government is useless to this there should be no need of the government in such a topic of economic system okay next up we say that uh what's to be produced is solved by producing the most demanded goods for which people spend a lot so you know this is the flaw this is the drawback of um this type of economic system you know these producers will only buy things or goods that will be beneficial okay they'll not but they'll not produce uh sorry not by did i say bye uh i mean to produce so these producers will only produce goods that will be beneficial and that can actually be a big risk because then they will start to produce the merit goods and look at what the merit goods are but and right now let me just tell you the americans are simply goods that have a harmful effect to the society okay it has a harmful effect to the society like um for example cigarettes okay because so many people are addicted to this because so many people want this they're going to be producing a lot of this and this can actually harm the society and and this society maybe they don't want education okay so no one is going to produce education so you can see how the producers just care of getting money and the consumers are literally careless there's no form of encouragement okay so hopefully you understand that too okay and uh now we move on to the advantages okay and uh also the last one is uh producers will only produce two people i can pay for the price if you have enough people i can pay the price okay go ahead no we only gonna be paying for them then okay so that's how everything works with this type of system okay let's move on to the advantages and then the disadvantages uh and then just have a few like definitions of the terms and we are done with this whole oh wait we have uh 2.2 again so well we're done with this long long type of notes there the advantages uh when looking at advantages we say a wide variety of quality goods and services are to be produced in different films that will complete to satisfy a consumer wants and will make profits okay so one is a wide variety of quality goods and services that will be produced from different films because you have a lot of competition and you want to satisfy your custom consumers to only buy with them the quality of the goods will become much better so that the consumers choose your business over the others because it's quite competitive in this type of system next up is that firms will respond quickly to consumer changes you know i demand i want this and they're gonna quickly make it because they all they want is just profit they just want to get profit and without any other factor they're just gonna make the good next we have the high efficiency that will exist and since producers want to maximize the profits they will use resources very efficiently so meaning that they will produce less uh sorry they will use less resources to make the uh less raw materials to make the product but so they're going to basically use it efficiently because they have limited and they know that so if they want to make more products they have to use less raw materials which can be helpful like they can cut less trees and because there's no government intervention you know it'll be very easy to start a business you know you'll have no requirements you just run the business and you sell the products you want to okay okay move on to the disadvantages and there many disadvantages you can see and that's why we don't practice it in these days first of all only profitable goods and services will be produced okay that was the first point and um this means that goods that we don't want and i've already explained this but i'm just gonna you know explain it for the sake of the disadvantages examples would be like the demarcus i just talked about and also we have public it's publicly just simply um i think we'll have a look at that and one of the disadvantages to or if we're not i'll just explain it right now yeah i think i'll just explain it because i can't see it in the disadvantage i do i do so we'll come into that okay we'll come into public goods let me not uh explain it right now so we will come into the goods in just a minute uh the next advantage launch it sorry is the firms will only produce for consumers who can pay for them so people people um they don't get any goods and if there are so many rich people they are willing to buy you know at this price the producers will be like okay we only want money so we're gonna increase the price because the rich people can pay for it so the poor people what about them they will be left behind and they cannot buy it so the poor people will be remain behind next up we have only profitable resources that will be employed okay so again it's similar to point number one uh basically some resources you'll never use them because when you're making that type of good service you will not only need it okay so it's quite um important to be uh like that too so only the profitable resources will be used and some of these resources will be left unused okay in a market economy uh capital intensive production is favored over the labor intensive production so you'd have more machines than labor because it's more uh cheaper and it's faster so this can lead to unemployment too then we have the americans have explained this the americans are simply those goods that have a negative impact to the society but because the addictive um people were gonna buy them okay then we have the negative impact on the society okay and this would be externity this this is what we call external externalities so these are basically the negative impacts on the society and because they're ignored by the producers his whole motive is to keep the consumers satisfied and generate a high profit okay and lastly uh second loss i mean is the firm that is able to dominate or control the market is called monopoly so they're just going to dominate like coca-cola you know they're going to be the highest in the soda making so they're going to over uh rule the other companies next up we have due to high competition between the themes there will be duplication of products okay because uh maybe you know there's this product that's very very popular then everyone's just gonna make that product there'll be duplication there'll be no uniqueness there'll be a lot of waste of resources finally let's move on to the three terms not um it's not disadvantages i would say that but it's just terms you need to know okay public goods so here's where i come to public goods so goods that can be used by general public from which they will benefit their consumption cannot be measured and thus cannot be charged at any price and that's where we have a problem of free riders okay so you'll get to know about that when we look at um the market or mixed economic system we'll look at that one uh but that's where we look at free rider problem but public goods are simply given by the government but in this case they know the government is not giving anything then we have the americans americans are basically the positive effects that is on the community and is to be promoted to consume more for beneficial purposes and examples would be education um medical care so on so forth and then we have the americans that give the positive effects on the society like cigarettes and alcohol okay uh we'll look at how the government will control all of that in the mixed economic systems in just a bit i think that's one that's next and then we have subsidies which is simply the financial grants that uh is given to the firm so that they can lower the cost of production maybe to promote a good service okay so we're done with this a long long little slide there but we're gonna move on okay so now let's have a look at the next one we're going to look at the market failure and government intervention so market failure is quite also popular so we did look at the public goods and we've looked at the americans so you can check that out okay so these are like more like oh moreover the term that you need to know okay so we've looked at public goods and i've told you we've looked at the markets and now let's have a look at uh negative externalities we've also have a look at this so this is called external costs so these are basically negative impacts on the society uh because of producing something for example smoke or pollution which causes pollution right there let me have the external benefits for example like a farm okay uh maybe because of a farm you could could send or maybe because of a farm uh i don't know you can you can get uh maybe a fresh soil or something like that maybe there won't be any insects around there because they fumigate or something like that but they can also be a negative externalities because if you live next to a farm that will mean that they can be more sort of um we can say more insects because of the more pests because of that but at the same time it depends on the form so it can be external costs external benefits we call that negative externalities and positive externalities and then we look at the private costs which are basically all the costs that the producer and consumer uh receive when they're producing or consuming respectively okay and uh for example the cost of production when i'm making a certain product that cost of producing it okay is when what we call private costs and then what we say with private benefits okay is simply when uh there's a benefit of the producer consumer because of production or consumption and an example would be better immunity when the consumer will get a vaccine then we have social costs and social costs are simply the external costs plus the private costs so remember external costs were uh simply the negative externalities and when i add them with the private costs we call them social costs and the social benefits are basically external benefits to the private benefits now we move on to market failure and factors affecting market failure so first of all we need to define what market failure is so consoled what is market failure and then go on to talk about that okay so i'm going to start off by talking about the market failure definition and then so on so forth talking about it more okay so let's begin what is market failure okay so market failure occurs when the price mechanism fails to allocate resources effectively and this is a very disadvantageous aspect to the market economy okay and the factors or the causes of market failure are when the social costs exceed the social benefits when there is an over provision of the merit goods okay this basically means when uh there's more like uh cigarettes produced uh we call that over provision of the americans when there is an under provision of miracles maybe education is not given enough importance so no one produces it okay that's called under provision america this is all because of market failure okay then you can see lack of public goods so because there's no uh maybe because you cannot measure how much is consumed businesses will not get street lights and everything so therefore that will lead to lack of public goods then we have the immobility of resources and that basically means when the resources cannot move between the optimal use okay basically when a resource doesn't have many several users and we've talked about this the economy could uh we can say that um you know for example workers that only have one particular skill you know they'll be immobile they will not be needed so you know they're not going to be used next one is information failure and most of these are like relatively direct so that's why i'm not really emphasizing on that much so it's quite direct so information failure basically when the information between the consumers producers and the government are not efficiently are correctly communicated so basically false information force advertisements okay so that's all leads to uh information failure and then finally we have the abuse of monopoly powers so monopolistic businesses may use their powers to charge consumers a high price and will only produce what products they want so it's quite a big disadvantage for them and what do you mean my monopoly monopoly is simply when one supplier supplies the entire market okay so for example soda only coca-cola will produce the dominating that's what we call monopoly so when one business dominates monopoly is when a single supplier who supplies the entire market with a particular product and has no competition okay so that's a good example now we move on to mixed economic systems so the previous one that we just talked about is called market economic system and now here we have the mixed economic system okay so now we're having a look at the mixed economic systems okay and uh the mixed economic systems is simply when the markets and the government intervene okay and uh this is basically uh used in most of the countries okay so most of the countries practice this um and yeah uk brazil will do some examples and uh this is because overrides all the disadvantages of both the market to plant economy okay so mainly the advantages of a market economic system is the disadvantages of this and the um and the disadvantages of the market economic system is the advantages of this so it's like vice versa so let's have a look at the features and then advantages disadvantages then have a look at the legislation okay so this is more like explanation on all of this um sort of thing so you can see how many factors we have affecting [Music] all of this okay now but we're gonna have a look at all of this uh you know in just a bit so yeah this is gonna be a long video because we're still in chapter two uh so maybe it's gonna take us about three hours maybe even more i'm doing all of this in one sitting so hopefully the the video quality doesn't change every time maybe the next break um will be a bit longer you know so you can recover from all these two hours of study if you're watching this live uh but let's move on to the advantages okay uh the government can provide public goods necessities in america so in the disadvantage they disappointed and this one is the advantage so the government can provide public goods for the consumers so the consumers will be benefited okay then um you can say the government will keep the externities monopolies and harmful goods uh in control so like alcohol what they do is they you know they put taxes so that they can control the things about the product so we'll have a look at that also rest in a bit so uh you'll get to know about that in just a while and then we have a look at the government can provide jobs in the public sector because now there's a public sector uh the government can now produce the jobs and then finally the government can also provide financial help um to collapsing private organizations okay so they can provide sorry about that so they can provide um about that okay so hopefully you understand that um we can give they can keep job security more secure okay then we move on and uh let's have a look at the disadvantages of this you can see advantages the disadvantages so it's quite like it depends okay and um we're now gonna have a look at uh this uh so let's have a look at the the disadvantages now and uh let's start with the taxes will be imposed okay because i told you uh each product will be sort of um [Music] it will be in control that means taxes will be there that will lead to rising price and uh that can be bad you know in a way it can be bad so that for taxes will be imposed to raise the prices and also uh reduce the work incentive okay because now because it's so expensive to buy this product you know why would you want to work for it or why would you want to buy it so that's one of the big disadvantages with this and then uh next up we have the laws and regulations which can increase the production costs so what this basically means is that you know the government now is intervening okay that means that there'll be so many laws like right now you know uh we have taxes we have a lot of regulations that maybe you cannot smoke in this area or sort of such that that will increase the production cost you know okay like maybe you cannot go you cannot pollute without permission or something like that you can only uh you know pull it this much amount so with all these logs and laws and regulations it will increase the production cost it will you know increase the production time that will lead to a lot of reduction in the production in the economy that will be bad for the economy so that's where the disadvantage comes and then we move on to the public sector organizations which will be source inefficient okay because there will be low quality goods and services because they don't have a motive you know because the government will not allow them to do that so that is all the disadvantages but if you've noticed you know in this one they're more advantages compared to the disadvantages but in the other one you know it was more of disadvantages than advantages so you're getting i hope hopefully you understand that so now we come to the ways to correct the market failure okay so for example there's market failure okay and it happens okay success failures but how can we correct them so that's where we come into the picture of having a look at legislations and regulations and uh what this simply means is that the government can make laws to regulate market activity and this is uh an example would be prohibit smoking in the public uh just like i give a similar type of example previously so that is that and uh they use these laws so that they can control the price because other than that you know producers can exploit the consumers which is bad okay so hopefully you've understood that now we have something called the maximum price and the minimum price okay so that's also quite important uh when having a look at it okay so we have something we say the maximum price and we have the minimum price okay so hopefully you understood you understand that okay so what that means is a minimum price is simply when there is like a price floor okay when there's a price floor uh or like a certain point of price where it is set to control a decreasing tendency of price okay so basically for example uh alcohol okay maybe you can say that you want a certain price so we want to decrease the tendency of price sorry sorry for example maybe education that was the op that's maximum price so with like minimum price you have um you have uh you want to reduce the price okay so for education you want to reduce the price so we use something called the minimum price which is basically a price flow and what this basically means is that it's a low okay it's the minimum wage law and what this means is that um it's a must to have you know this much for example labor okay so this means that um simply this what it means that uh if for example if you're a lit if you labor and you want a certain price to keep it like fixed because you know businesses will just give like a sort of low type of price um because of course it's cheaper for them but then you know every labor person has its own right so therefore uh they will set a minimum price so it's the same for the maximum price and you can see here's the diagram for that so you can have excess supply uh this is the diagram we have the demand curve the supply curve we have the equilibrium point and then the one above is called excess supply we've talked about this um uh so hopefully you understand that then we have the maximum price which is the opposite so there'll be supply shortage when the supply shortage what will that mean is that we need to increase the price so we use something for the maximum price um so for example the americans okay so if i want to increase the price i would use some um demand goods in order to increase the price so i do something called the price ceiling or the maximum price okay then we move on to the direct direct provision of merit in public goods since there is a little incentive of the price mechanism and we've talked about price mechanism price mechanism simply related to allocation of goods and services okay depend depending on the demand and supply so that's what we call price mechanism and uh there will be a little incentive because for example like free education you know if there is low price why would someone you know do education but that is why we have governments that provide them okay so governments would provide free education healthcare public parks and only uh the way they can do this is by introducing tax and they do this by nationalizing certain products so that uh you know they get a bit of the money so they can use it for uh you know their own funds to help their own public goods or to help their society then we have taxation on products and imposing attacks on products will lead to negative externalities and this will discourage the production and consumption so but it's it's very vital or else it'll be over consumption of the americans so here we have a diagram of taxation as you can see we have the demand curve and the shift right you can see there'll be a shift from the s let me just stick my pencil out there'll be a shift from the esk right here the supply curve to the supply one and then uh this will reduce to reduce quantity when there's an increase in price of tax so when there's an increase in a price you know there's going to be less quantity uh this is sort of also the law of demand therefore we shift to the left so you can just say shift to the left then we have subsidies some cities are basically financial grants and the financial grounds basically means that you're giving help to the uh to the producers so that they can make this certain product more uh so this can be good maybe if they want to promote a certain type of product they can simply say okay i'm here is my subsidies so produce more of this for example books for education they say they give to a book industry saying that here's some subsidies so that they can lower the production costs lowering the production cost will increase the supply and increasing the supply will basically give positive effects on their society if the product is a marriage good uh so here we have another sort of type of uh graph that shows uh when there's introduction of subsidies what happens so as you guys can see um you know it'll be a shift to the right so shift to the right is when the supply increases due to the factors except price okay so hopefully you understand that and then you can see that the movements along the demand curve or a supply curve is good only which happens as a result of a direct change in price of a good and a change caused by any other factors like tax and subsidy okay then we move on to tradable permits and this basically means that uh firms have to buy some permits so that they can maybe you know for pollution uh because if you over pollute then maybe the business is closed down by the government okay so it's quite sort of uh direct then we have extension of property rights may be you have a certain noise you can do or something like that so that it doesn't harm anyone around the place that's what we call extension of property rights that is also done by the government uh and so they they can extend property rights or right to go on the property or you know make the noise and this will be effectively privatize the resources you know you can you can create some peace between the individuals and the producers so it can show that then we have the international corporation and uh international cooperation simply means that among governments or governments that work together uh on issues that affect the future of the environment so uh basically what this means is that um you can see this market failure uh that we just saw and then we looked at how to correct all of this is to correct right so among governments governments work together in issues so that they can save the environment okay so they all you know work together to save the environment they can do a lot like policies or they can promote maybe if you collect litter we will pay you something like that so that's what they call international corporations so they they join as an ally and uh meet together we have then the political incentives and this occurs when the there is a clash between the political and economies that's what we call political incentives so these are now basically some meanings that is important that are very important so the secret is when there's a clash between political and economics okay so when there's a clash between the political and economics okay for example even though mining companies have a lot of environmental damage the government may encourage and promote the activities to garner political and financial support from them so that's what we call political incentives uh then we have a lack of incentives and this is happens in the free market when individuals profit from an incentive to innovate and cut costs but in the public sector what happens is that they'll only pay them salaries regardless of their performance and therefore that will lack an incentive so what they do is that the government provides certain public americans directly to the people at low costs and therefore that you know can give them a good incentive to work harder like maybe the girl the government can give them you know car or house or free education uh because they have the ability to do that so just because they want the incentive of the worker to be high then we have the time lags and information failure we have also talked about information failure as one of the market failure and basically this is when the government failure because of lack of incentive because government office and employees don't have incentive to you know do these services or give accurate information because you know it's too much work for them okay for example if you know they're doing a lot of uh offices employees and sort of stuff like that we then have the welfare effects of policies government policies such as taxation and welfare payments which is sort the market which basically means policies which will affect the demand and supply so when i create a policy it can affect demand and supply like a lot okay so uh taxes can basically you know lead to to a lot of you know change in the demand curve supply curve you know all of that sorts of types of stuff um so hopefully you understand that uh then you simply have all that for example high corporate taxes will deter companies from expanding their operations and making more profits or deter new enterprises from entering the market so there you go that is all of that and uh we have now completed the entire chapter two uh so let me show you where we have on our left okay so now we're finished uh chapter one chapter two and now we are moving on to the micro economic decision makers so we're going to finally have a look at money in banking we're going to have a look at households workers trade unions firms firms and productions firms cost revenue and objectives and then finally have a look at the market structure and that would then after that complete live stream but again we might have maybe another hour or two to complete this and i'm doing this all in one sit so it's quite hard for me so uh hit the like button and if you've reached this far well that's really good you're really serious uh thank you again for reaching this far if you have from the start almost two hours now we'll have a break which will be about 10 minutes long so we're gonna have a 10 minute break because again this is going to be our second break so i'm going to have a 10 minute break and then continue with money and banking and money in banking so again a big topic so uh we'll have look and that is the gas can see so it's actually it's a small topic so but let's see what can i do anyway that is um second session and now i will see you after 10 minutes to do the next session so i'll see you in 10 minutes okay okay so i just came a bit early um yeah maybe i don't know i was thinking of putting some music here so i don't know so should i do that oh no maybe in another stream i'll put music so if you're watching this like i don't know if you're watching this uh after the video i don't know comment down below and then you can tell me if i should add some music or do you just guys just like that plain i mean if you've reached this far well and good i mean uh yeah so let's just uh begin and let's talk about money okay so what is money okay so basically money is a medium of exchange of goods and services so when you talked about it remember when i talk about economy uh when i talked about the economy i said it's basically the exchange of goods and services between the producers and the consumer and uh for the producers they're exchanging their goods and for the consumers we're exchanging money okay and this concept was actually taken from the bottle system okay and the water system was basically the exchange of goods okay now i do this service you give me this service so sort of like that and then off the time someone came up with money uh basically you earn the money you earn the value and then you can exchange it for good services so that's how everything works that's how i bought a system works and uh we use that money uh today as a form of currency notes and coins and some of the features that uh the money must have should be durable uniform meaning it should have only that a certain type of design they should not be like easily copied it should be divisible meaning you know tens fifties hundreds so that you can pay in sort of sections and it should be portable and uh generally accepted by the community okay so durable uniform divisible portable okay so uh yeah hopefully you got that and these are the characteristics so not features more of the characteristics of what we consider as to be good money but producing it so let's start with the functions of money okay so uh let's have a look at the the functions of what money is you know and everything related to money so first of all you need to know that money is a medium of exchange okay and i told you that um like in the start start of the economics we talked about economy i think that was what chapter two the start of chapter two where we talked about economy i talked about the exchange of the medium okay and money is the exchange of the medium and uh money has a value so the second function is that money is a measure of value and money acts as a unit of account allowing us to compare the state and the width of different goods and services okay so basically what we say with money is that it's basically a measure for value so medium of exchange measure of a value money is a store of value basically it holds the values in the long term and then finally we say that money means of deferred payment so different payments are basically um they are made on purchases on credit uh basically you can say that okay i'll pay you this money later first give me your service and i will pay later so that's what we call by deferred payment so medium of exchange measure of value store of value in deferred payment keep repeating it medium of exchange measure value store value deferred payment medium of exchange measure value store value for payment so if you keep saying it you know you also understand so you need to know these functions you need to know these characteristics let's move on to banking so in economics we have a look at both the commercial bank and also the central bank so we look at the two functions of them and that's all we do with banking okay so banks are basically financial institutions that act as an intermediary between the borrowers and savers we look at what borrowers and savers and factors affecting borrowers by factors affecting you know saving and everything just in a bit after this i think we're gonna have a look at that and basically it is the money we save at the banks okay that is the one that gives us the loan so you know when you're actually having a loan it's actually taking someone's money in a way because they stole that value in the bank and then the bank has the ability to give it back okay so that's how uh basically loans work and the commercial banks are basically banks that have retail bunches located in most cities and towns and then of course the central bank is the main they given the commercial banks too okay for example uh the reserve bank of india the rbi okay so that's just an example that would be the central bank move on to the functions of commercial bank okay so you need to have a idea of the functions of the commercial bank at the same time have a function of the central bank so they have different functions the first function of a commercial bank is to accept deposits in the forms of savings okay so what that means is that uh what we say by accept deposits in terms of savings so for example i go to the commercial bank i deposit this amount of money for savings because why does someone save you know it's more secure so reasons for saving it's secure uh you know if you store in the bank they give you money back okay it's uh they give you money back so because of you know keeping it that's why people you know save because if you save you're giving them the bank money okay but when a bank goes bankrupt is that's where the central bank comes into the picture next up is the aid of customers in making and receiving payments via the bank account so if i have a credit card you know they are the ones in charge you know maybe i want to use my credit card the commission banks will send me messages saying that you've made a purchase of this using your credit card are you sure oh yeah you want to confirm that so all of that is done by the commercial bank then they also give loans they buy and sell shares on the customers behalf they provide insurance um for example if your money stolen because of theft they will give you insurance but at the same time we have to pay for the insurance then we have the exchange funds currencies and then they provide financial planning advice so they give planning advice we're going to move on to the functions of the central bank now central bank will issue notes and coins as a form of a national currency they they make the coins or they issue the coins in a sort of way they manage all payments relating to the government so whatever the government makes does buys whatever the government deals with you know whatever the government does uh it manages all the payments so the central bank does all of that it manages the national debt for example if you have taken a loan from another country you know this is a big scale so central banks do all this and then they'll repay so central banks are like the big deal you know commercial banks are just like for the consumers but the central bank talks about you know like billions of money millions of money um they deal in like big big you know type of thing so that's what they call the central bank uh it's also a land of the last resort so for example if the commercial banks don't have enough money uh that is when the central bank comes into the picture it gives them some help by providing more money from its own then also it manages the country's gold foreign currency and all of that um basically adjusts the exchange rate and then finally operates the monetary policy on the incoming economy which we will be explained later so that is that's all you need to know with money and back we move on to households okay as also so it's also not that big of a topic as you guys can see so let's start with spending okay so we're going to start with spending i tell you what spending is i give you the factors okay saving tell you what saving is that give you the factors borrowing i tell you what borrowing is i give you the facts okay and that's all you have to do so just three of them and we're done with uh the household so it's quite simple so let's start spending what is spending it comes from its english word spending okay when someone tells you spend what does that mean simply simply means that the buying of goods and services is called consumption so spending would be you know uh same thing okay so when you spend money for consumption purposes that's what we call um spending okay so when you buy a good service for the sake of consumption we are spending something and this is called the consumer expenditure and people consume in order to satisfy their needs and watch and we've seen this in like the basic economics we've seen this in like the start uh so you you all know this okay so let's have a look at the factors that affect consumption and more of these factors are like they're almost similar for all three of them so we start with number one disposable income so disposable income is the same thing as just normal income uh what that basically means is that you know um something that relates to just normally when i work something that's my income so if i have more income what does that mean i have the ability to consume more meaning the ability to pay more so that therefore i will be having the ability to consume more so my spending will increase if i have a higher disposable income the next one is that wealth if i'm rich okay the more wealthy will have uh big assets and he will be the person who spends a lot then we have consumer confidence if i'm um if i'm confident that my job will uh suffice me uh or will produce me enough money so that i can do this or sort of spend this much you know then you'll be confident and he will spend more finally then we have interest rates interest rates is what i told you back in the start if i basically it's provided by the banks because of saving if you save if the savings are high maybe if the interest rates are high and consumers will save more and that means they will earn more interest and therefore their consumer expenditure will fall so that means they will not have enough to spend because uh you know the bank is going to pay them back later so they're saving then we move on to saving talking about saving let's have a look at saving so saving basically talks about um when the income is not spent and uh when people save the money by depositing in the banks and then they withdraw it later and um that is what we called saving okay so what are the factors that affect savings so saving is more like uh sort of self-explanatory again um as you guys know so saving when we're looking at saving what do we say the fact is effect saving are number one be saving for consumption okay this means that if people say so that they can consume later they will save money so that they can make bigger purchases in the future like a house so they'll start saving right now maybe for your uni education okay and therefore it also depends on the customers future plans or the consumer's future plans so if my future plans is to buy a house in the future then i will save right now so i can earn that money back then again we have disposable income just like the previous uh one for spending um basically if the amount of the disposable income is high if i have a high disposable income that means that i will save more and if i can save more then um you know uh there will be more savings so that there's a thing also saying the rich will be richer because they have more money to save so they'll just keep saving and then you know you'll keep investing so you know it's a win-win but the pool will remain poor so it's it's a saying like that okay so it applies also in economics the next one is the interest rate so interest rates are simply when you put like a money into the bank the bank gives you certain price back okay because you know it's helping the bank in their day-to-day running so if you give your money to the bank they will have to get something returned yeah why would i save you know so that's what we call interest rates if the interest rates are high then you know there'll be more saving and uh interest is basically the return on the saving okay so the longer you save an amount the higher the amount you get the higher interest rates that you receive then again consumer confidence so you can see most of the factors are just like the one previously consumer confidence simply means that if a consumer is not confident about his job security and incomes in the future then he might not save more he may save more sorry so if he thinks that okay you know my job is not secure he's going to save more finally we have the availability of saving schemes okay this basically means that a bank can offer a variety of saving schemes and this basically is used so that they can attractive uh they can have more attractive schemes which will basically benefit consumers so you can say you know if you save this after four or five years you will receive this much amount of money or you will receive a holiday or something like that so these are basically saving schemes that are provided to the consumer and uh which can attract them to save more so if they're attracted to save more than they'll be higher saving let's move on to borrowing so boring is basically just like it's red um just like the english name um so basically just means uh it basically means just borrowing from a person okay it's like okay you know in english they tell you don't use the same word to you know explain but it's sort of like you know self-explanatory boring you know to receive from a person or institution okay yeah that's a good version so the lender will give uh the borrower okay and uh yeah so that will be that okay then let's have a look at the factors that affecting uh borrowing the first one is interest rates we talked about interest rates a lot okay we've talked about it a lot a lot and basically this means that uh what this means is that it also allow interest is also the cost of borrowing when a person takes a loan you must repay the entire amount at the end of effects period okay so when you borrow you know that the way you save you get interest rates this time you have to give the interest rates okay so it's like vice versa if you're taking then you have to pay the interest rates but if you're giving then they will pay you the interest rates so that's where we come into the interest rates so if there is a less interest rates than uh to pay back then you know people will borrow more okay like in different countries they have different interest rates um to pay back okay the next one is wealth slash income okay this one is uh banks will give you a loan if you're wealthy because they trust you they they know that you're gonna pay the amount back so they look at uh wealthy people because if you're wealthy then you have the ability to pay them back quicker maybe therefore they will give you a loan as much as you want so then we have consumer confidence consumer confidence basically simply means if i'm confident about my financial situation then i will uh it will affect borrowing too for example if you think that the prices will rise in the future maybe then they will borrow now because it's cheaper and then they'll make the big purchases before it goes like yeah before clovid hit you know um if you knew that code is gonna become big big like this uh you would make big purchases so that um going to help you in the long term on the long run so that's where borrowing comes uh okay so that is uh then we have the ways of borrowing sorry i missed that one the last one is the ways of borrowing and this basically means that the number of ways to borrow can influence the borrowing and nowadays uh there are many borrowing types of facilities such as overdrafts backloads okay so it also depends on the way of borrowing uh so you know sort of that and then uh this one just talks about the saying about the richer you are you know more uh which you get the poorer you are the poor you get you know something like that okay so we finished household uh now we move on to workers so and i think in this live stream we'll just finish the trade unions and then we'll resume after a while so it's still quite some time left though or maybe we do workers as the last one so i think what do you guys think because it's a very very very very long you can see how long it is you can see very very long it's very very long so i think i'm going to end the stream right here it's quite fun to use such a long long stream so i i covered a lot actually and uh hopefully you enjoyed this type of livestream the long live streams i'll make a future one where i continue with the labor because you can see i have a lot left and now i can't record everything in one sitting so i think i'll call it a day uh hopefully you enjoyed it um quite a long live stream almost two hours 30 minutes no but it was very fun to be honest uh this was my longest live stream that i've ever done on youtube and hopefully you learned something and if you're watching this as a video then if you've made it this far wow that's uh amazing and uh yeah so hopefully you enjoyed this video this is very very thorough revision literally details if you want these notes uh when i publish the video this will be in the description um so you can go check them out yourself so thank you for watching this live stream and i'll see you in the next live stream or video so goodbye in