9b. Cobb-Douglas Utility and Demand

[@markcanclini]

Paul Rudd is teaching me about utility. What a talented guy

[@Mattkrob24]

I'm currently taking advanced microeconomics at the masters level and have struggled with this due to the over complicated notations we use, with no explanation of what the terms mean, no mention of MRS or marginal utility and what represents what. Just math/calculus steps with no explanation of what it is. So this was incredibly beneficial for me, as I will be putting it to use in finding Marshallian and Hicksian demand, as well as the indirect utility function and expenditure function. Thank you so much! I'll be watching through even more of your videos as they pertain to the rest of my program.

[@noueruz-zaman7894]

same.. i also just started studying microeconomics for my msc finance course at university of london

[@PJWOODS]

Amen brother having the same issue at the University of Melbourne

[@helenyoon8915]

same,, i wish they explained each terms at least. I don’t think cobb douglas itself is that hard but if you try to understand without knowing what the terms represent ur completely lost

[@vaca4m]

you realy saved my life, my english is not even good but could understand well your explanation for this, i'm really thankful great vid

[@rushikesheducation]

I wish KZbin was a university. Would definitely be in the top 10.

[@OMFGTHISNAMEISTAKEN1]

Fantastic stuff. I learned more in 10 minutes than I did the past 2 hours in lectures.

[@hamzamallick5816]

thanks for the video. I followed your steps and it makes sense. Was unsure how to do this when solving for demand functions for 2 person economy in general equilibrium. Makes sense now

[@gomez8191]

your explanation of how the shares of income relate to your expenditure on goods was awesome. thank you

[@ajsimbarasi7755]

You can always pause the video mate, he's doing a great job

[@OBHejv]

This is really great! I've been scanning youtube for a while looking for macro sesisons. Your skipping and "post it-notes" are fantastic!

[@chadpace36912]

You have the best econ videos on youtube!

[@nchimunyachipohamukoma5540]

Never knew Cobb Douglascould be this beautiful. My exams thank you :)

[@damankj]

This was SO good. I really appreciated that explanation.

[@shorndrack]

Your videos are helpful and making my exam preparation easier and also I understand the concepts, thanks to your clear explanation :)

[@竹内湘]

Thank you soooooo much for making it easy to comprehend!

[@ARrocket]

Even helped as a reminder for a graduate econ student, well done!

[@synyster00sevenfold]

AMAZING explanation! better than my university lecturer. thank you so much for this video

[@prodigiii712]

I wish this guy was my homie. I would do everything for him just to teach me economics.

[@simpsondudeno1]

Excellent videos. All thats missing is worked examples with values.

[@roofie]

Better than going to class. Thanks for clearing a lot of things up

[@coolsauce96]

You should add how to compute the compensated (Hicksian) demand from a Cobb-Douglas utility function. Please!

[@intromediateecon]

@Longanecker That's correct. My video on the Slutsky equation (11a) talks about the relationship between Hicksian and Marshallian demands. I don't have any videos with Hessians, but my videos on the Envelope Theorem (24a, 24b) show -- as one application -- how to derive Roy's Identity. As for now, I have nothing on deriving Hicksian demand using a specific functional form, but I hope this pointer to my more advanced videos helps.

[@MaThienThan]

Thank you for this video! It's really helpful and easy to follow

[@intromediateecon]

@brunogrim That's not quite a Cobb-Douglas. Cobb-Douglas has the form Y = (L^a)*(K^b) or any monotone transformation of it that doesn't involve K or L. Your function equals Y = (L*K)^b - (aK)^b, which isn't a monotone transformation of the basic form.

[@Roflmao919]

You're a hero

[@MrRikesh3]

THIS IS AMAZING!!!!!!!! is there a video on slutsky compensated demands? or one on uncompensated vs compensated demands? YOU ARE A HERO!

[@umairshafiq23]

i can't thank you enough for this video. seriously thank you!

[@highwind68]

You are a godsend my friend.

[@zach-el2cl]

Fantastic! Tons of help! Thank you so much :) I will definitely be buying the book as well, my intermediate micro one is garbage

[@Tehui1974]

What would really help a lay economist like me, is if an example is used. Label the two goods, give them prices, set a budget, and put it into practice.

[@sanahusain5235]

Hi great video ! could you please answer my question. So if the price of good x goes up , does the consumer buy more of good y instead ? thanks

[@DrummingWithDale]

Good lord man, you lost a lot of weight between this and the last video! Keep up the good work!

[@jer0me89]

If only I could write as quickly as you during my exam! :)

[@Gboyega001]

This is really wonderful.

[@crazyjoker11291]

Excellent video!

[@vincentlim9031]

Thanks soooo much for this video! You rock !

[@jamielonganecker]

just a note : the x* and y* are the marshallian demand values right? are there videos with hicksian demand, roy's identity, hessian matrices?

[@idajawox8697]

How do I know what alpha is equals to? I have an equation of this sort: Q=100 sqrt of (K, L,) So what is the value of alpha in this function when I differentiate?

[@intromediateecon]

@brunogrim No. I don't have a video on that topic, but I should. I'll do something in the near future on returns to scale. Thanks!

[@intromediateecon]

@miraggg For Cobb-Douglas, you could memorize the formula, but that's a lot of work to avoid learning the power rule. If you're talking about a general utility function, you could approximate MUx by increasing X by one unit and asking how much utility increases on account of that. Again, that's a lot of work to avoid calculus. If (on the other hand) you just want to know the concept of MUx and MUy, you don't really need calculus. See my video 6 for more details in a non-calculus setup.

[@Sisilorulz]

can you make videos on perfect substitutes and complements as well?

[@rrspro92]

this is probably a basic question, but when you move the x to the denominator for the marginal utility of x near 1:22 of the video, why do you raise it the 1-alpha? Would it not be (1/x)^alpha?

[@beaf1]

So in the Cobb- Douglas function, no matter what the price is, you will spend "30"% of your income on good X?

[@szpacur]

Great job buddy, keep it up

[@bonec120]

thank you so much saves my life!!!!!!!!!!!!

[@evanlarson9427]

awesome video

[@Hirchy123]

how do you represent the demand functions for X1 and X2 (goods 1 and 2 / x and y) and how do you graphically represent the solution if utility is fixed at U0

[@Colleenlore]

if this is intermediate microeconomics, how much harder is advanced microeconomics?

[@aperson4340]

fail to understand why the MRS using this function will always result in a diminishing MRS, as X increases why do we assume that MRS must diminish? do we assume that as X increases Y remains constant?

[@intromediateecon]

@rrspro92 These are all the same. Basically, this is the commutative property of multiplication combined with the fact that raising an exponentiated expression to a power is accomplished by multiplying the exponents. Let a be "alpha"... then... y^(-a) = y^(-1*a) = (y^-1)^a = (1/y)^a.... or alternatively... y^(-a) = y^(a*(-1)) = (y^a)^-1 = 1/(y^a)

[@kvindicator]

Y=(L-a)^b*K^b assume a variable "X" X((L-a)^b*K^b))= F(XL,XK)? This is what you have to answer, plug the "X" into the function for K and L and see if it is larger than duplicating it "X" times.

[@miraggg]

is there any other way of finding MUX and MUY without using calculus?

[@inocentlema5574]

you are very smart bro

[@KhalilHomaam]

If you still don't believe that economists suck, watch this video !

[@iamtheman584]

i know what you mean but i feel like without the cuts, it makes sense seem more natural. i honestly don't mind seeing you write things. if anything, it might actually help people remember better.

[@xunit94]

Whats the difference between solving for demand this way and using lagrangian method?

[@darksoul1381]

Just stick with the lagrangian method if you know it to find your demand function. This is an extended explanation.

[@sami-samim]

Langrangian is more powerful. Otherwise they are both two ways to skin a cat.

[@fatimamansoor259]

lagrangian is an indirect way of proving the same steps, we are also only dealing with 2 goods here; so the use of lagrangians is not required.

[@anarki777]

You're just like a university professor, hardly any explanation. I only understood this when I came back to the video a second time, after already having understood it from my textbook.

[@intromediateecon]

@OBHejv Thanks! Most of my videos are micro (with some metrics), but I hope this is helpful.

[@daniella173]

Thank you! Very helpful :)

[@rrspro92]

same question for the marginal of y at 1:45 of the video, wouldn't y^-alpha transition to 1/(y^alpha), not (1/y)^alpha

[@10TIMT10]

lifesaver! thanks:)

[@yzc4566]

must cobb douglas utility function add up to 1?

[@Demetra92]

Thank you very very very much :)

[@daiyangli]

thx helps alot

[@intromediateecon]

That's fair, but it would also be boring and inefficient to stare at my back while I write what I say I'm about to write on the board. I've had just as many people say that they like the jump cuts as the number of people who are annoyed by them.

[@superchicken1832]

Thank you

[@AhmedMalik781]

Awesome video, using numbers would be more helpful in keeping up with you

[@Bernd123]

ma hero...

[@roankenge6075]

hey for begginers like me a continuous video will do much better because of continuity don't just give the final solutions assuming we all know how to derive them.

[@HugoHenson]

btw, keep the cuts!!

[@Shafique96]

good video but i think it could be better if there was more explanation to help to understand the general concept.

[@waksibra]

what class is this for?

[@ryanlewis7124]

But i appreciate your shit here

[@AminishElaroussi]

the most important part you cuted and edit the vedio that make it confusing so it would be nice if u didin't :) good job

[@intromediateecon]

lo siento. hablo ingles bien pero hablo espanol muy muy mal.

[@iamtheman584]

i do recommend you to not cut and edit the video so much... it gets kind of annoying and it can get confusing sometimes... i do films so i know.

[@AnDyMaksoud]

No fucking idea, thanks.

[@ryanlewis7124]

So much white noise.

[@andrerodriguezdi]

que mal que sea en ingles D:

[@critharchie8043]

Cuts aren't helpful