Budget Constraints
Think through all of the variables that determine the price of a cup of coffee. It might help to imagine the coffee beans on the farm first. Consider the land costs and the price of the farmer’s labor. What about transportation of the beans to the roaster? There are packaging costs, oil costs, driver costs...and we’re still only talking about the beans!
Once the roasted beans finally make it to your local coffee shop, they still have to be turned in that cup of coffee. The cost of rent for the building is a factor in the price of the final good, as is the labor of the barista and the price of electricity in your area.
We’re barely scratching the surface here, but you get the idea that a ton of variables are behind the price of even a relatively simple good like a cup of coffee. What you, the consumer, are able and willing to pay is yet another one. Your salary helps set your budget constraints. And your budget constraints are a crucial variable in helping you decide whether to spend $5 on that cup of coffee, or $5 on something else.
In this video, we’ll examine what budget constraints look like and how they function by graphing a simple example: $50 to spend on $5 coffees or $10 pizzas. You’ll see how the graph shifts as variables change. We’ll also use this example talk about a fundamental concept in economics that can help you make better decisions: opportunity costs.
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I think MRU considered everyone who they are non-English speakers. Calm and detailed explanation, amazing animation work, etc everything is just perfect. Thank you so much!!!
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@MarginalRevolutionUniversity
7 жыл бұрын
Thank you! -Roman
@vyshniishwaran5580
5 жыл бұрын
I LOVE YOU GUYS TOO! Please don't stop making these videos! Hello from New Zealand :^)
MRU is a huge reason why I'm graduating cum laude this semester in Econ. Can't thank all of you enough
this video helped calm my fear of microeconomics and inspire me to want to learn more. there are no words for how great this video is
Since Im a visual learner I appreciate the many pictures and diagrams, really helpful. Thank you!
@MarginalRevolutionUniversity
2 жыл бұрын
You're very welcome! -Roman
great channel, I always learn something. Ms, don't stop teaching, thank you
Thank you so much. I'm in law school and I have one exam in economics. I never understood it really but you explain everything that's written in the book in a much more comprehensive way. If i pass this exam, it will all be thanks to you.
i showed this video to my dog, now he's in law school
@welbeckasare2164
7 ай бұрын
😅😅😂😂😂
@angryidahobusdriver
4 ай бұрын
Dawgy in the markets! Awesome to hear
amazing way to study economics. really useful material!
Excellent study material! I liked very much the previous teacher, but this woman is the best!
Another excellent video from the MRU team! God bless you all!
Omg thank god for this video!! You helped me so much in understanding the opportunity cost! I was about to cry thinking that I was doomed to fail.
This is the one of the best explanation about Badget Constraints, thank you
I go to Princeton and have my micro midterm in 3 days and I have learned more from watching two hours of your videos than I have this entire semester. Thank you
@MarginalRevolutionUniversity
2 жыл бұрын
Best of luck!
@juderocks5
Жыл бұрын
I go to Columbia, and I share a similar experience. Although I know most of this already (I should, considering I'm an econ major), these videos are a wonderful refresher for the basics. This is especially true since students have a tendency to panic before exams, and if I can explain things in a simplified manner (like in these videos), not only can I help other students, but I'm much more likely to retain my ability to recall the information during a critical moment (unintentional Feynman technique). So thank you, MRU, and please keep it up; I've already recommended your channel to other students.
Brilliant video! mastered everything in such a short time frame! really helpful for refreshing memory! cheers 👍🏼
You are AMAZING !!! you deserve everything good in your life because of this amazing video! Thank you 🧡🧡
You just made my microeconomics course 10x more easy. Thanks a lot!!!
thank you for your amazing videos! they are really fantastic and easy to understand especially with special effects :).
Be my professor you explain good
This is such a great video! Something clicked for me. Thank you!
Excellent! Thanks. Its clear.
İt is a very clear explanation. I understand this topic much better now, thank you so much.
Wow your explanation is mind-blowing and from India ,and any lecture could not teach as a simple way like you😮
Love your animations!
You are the best! thank you so much, please keep on making such good videos :=
Watched straight away after getting the notif
Thank you so much❤️please keep educating us❤️
am always studying online but i have never came across one of your video but my previous 1 i saw made me just subcribe to this channel and am here to stay
Mam this video was extremely helpful, you have an outstanding way of explaining. Thanks.
Happy teacher's day MRU❤️ Thanks alot🙏
Helped me understand this in a minute Thank you so much 🥺🙏🏻
Absolutely amazing explaination.
fantastic videos, thank you so much, i am from vietnam
I love her :) and the video edit? PERFECTION
I was so comfused about how they came up with the graphs in a certain book i was studying, but this video just explained it all clearly 👌
Wowo this was just an amazing video. Well edited and awesome explanation
why would anyone dislike this?
Explained this much better than my professor at university ever has
her voice is so soothing.
The script is simply too great.
Budget Constraint = possible combos given the budget and prices
@Mark-ye9pi
2 жыл бұрын
above (outside) the budget line = what you cannot afford
@Mark-ye9pi
2 жыл бұрын
slope of budget constraint = opportunity cost of pizza (x-axis)
@Mark-ye9pi
2 жыл бұрын
INC Income = budget constraint shifts OUT (INC)
@Mark-ye9pi
2 жыл бұрын
INC other factors (good weather) = budget constraint ROTATES out from the top to indicate coffee being more plentiful and less expensive. pizza quantity remains fixed on the budget constraint.
@Mark-ye9pi
2 жыл бұрын
Price change = slope change
Pls make videos on short run and long run average cost curves
Wow this soo good thanks i have an interim assessment tomorrow
Very Good.
I just love these videos, wanna know a secret? i love these more than I love my college lectures
i love you guys
wow this is more easier to understand
Smart kind and beautiful. Thank you mam
Joana make me love the course than my lecturer 😍
great job, even I can understand it
Ma'am Could you please explain how a consumer reaches from a point where MRSxy is less than Px/Py to the point of equilibrium?
I understand more you guys than my prof
I wish I could pay as much attention to these videos as I do the comments...
What anyc claz it meks de lesson vry enjoybl nd easy 2undrstand.
What is the difference between budget line and budget constraint?
Extraordinary
Mam can u pls make tutorials on price effect (income and substitution effect)
Brilliant
excellent
Budget Constraints isn't about the marginal rate of substitution, it's about the elasticity of substitution.
Amazing…
in which software this video is made?
Thanks so much but can you as well help me on understanding the difference between income consumption curve and Engles curve plus the price consumption curve. Because this side is poorly taught, I wish u could be my teacher I would achieve only flying colors all-over
what if you don't know the prices of the two goods?
On ne peut pas mettre des sous titres en français ?
I wanna eat pizza drink coffee while watching this video
Charustian ,changa, Gujarat, india
damn yall just killed ACDCecon
impressive
2 practice questions below that needs to be solved. Please help me in the simplest way! 1) Suppose the price ratio of two goods is 3/4 and Jason has a budget of $100. If the price of good X increases from 6 to 12, what is the new price ratio? * a. 1/4 b. 1/2 c. 3/4 d. 3/2 e. Cannot be determined from the given information. 2) Suppose the price ratio of two goods is 3/4 and Jason has a budget of $100. If Jason’s budget increases to $150 and the prices of the two goods stay the same, what is the new price ratio? * a. 1/4 b. 1/2 c. 3/4 d. 3/2 3. Cannot be determined from the given information. Thanks in advance!
@sallyrefaat8536
5 жыл бұрын
did you get a reply! as i'm also confused for those two questions thanks
Greetings from institute of accountancy arusha Tanzania
easy way to learn economics
if I did not understand BC after this, I would be re-enrolling into elementary
4:44 I feel like a 5th grader, when I see this image.
@shopaddress11
5 жыл бұрын
:D
@_________-__________-_______
4 жыл бұрын
More like an 3th grader realleh, but it does have a better explain element so i don't mind
Goddess
useful
The cost of coffee also depends on the exploitation of Africa
@mostafaelhndawy6050
9 ай бұрын
The cost of anything also depends on the exploitation of Africa*
@MountH212
9 ай бұрын
@@mostafaelhndawy6050 And the freedom of Africa leads to the agony of neanderthals
If she does all the job, why is she not in the opening?
that's a very expensive cup of coffee..
@susielynn2443
4 жыл бұрын
starbucks
A diet of coffe and pizza sounds disgusting...
@shopaddress11
6 жыл бұрын
I know, right?! -- Joana Girante
o
Moral of story eat burgers