The thing is, Imran produces 2 000 000 cupcakes a year and only sells maybe a fourth of that. He still pays money for those other cupcakes, but they go to waste, so he'd be losing money.
@takalotopopo The "cost of good sold" takes into account the price of all the cupcakes made, whether or not they are sold. That amount is subtracted form the revenue, and it doesn't change when the number of cupcakes sold changes. The reason he doesn't lose money is that he makes a profit with the cupcakes he does sell, enough to cover the total cost of production.
excellent khan sahib (hope u knows the meanings of sahib,if not let me know!) u are awesome person & have become a role model for me too!may ALLAH the almighty bless u even more so u can bless the world more in this beautiful way!aameen!
Good job highlighting how prices increase in the short run when demand (capac util) is high. You also showed that in the long run they fall. This is seen when 2 new entrants opened shop upon recognizing Sal's Cupcakes was enjoying an "economic profit," depicting an increase in "capacity."
The last 3 minutes of video though you forget to mention the LONG term effects of prices falling once investment and the arrival of new entrants take place.
Your brief reference of how perceived increases in income came via cheap credit, perfectly explains why demand is now down.
Not enough commentary space to fully explain, but you likely know what is entailed: government intervention creates distortion. Capac Util/Demand increases. Prices increase in short run. Supply increases in long run. Distortion is later exposed/removed, demand shifts back to original position. Too many new entrants entered the market, prices fall until firms go BK.
That's why I do my job...b/c it gives me joy to help people through an emergency.
You don't get rich from being a paramedic, but I don't want to be a doctor of Emergency Medicine, which would make me more money than working on the ambulance.
Having worked in a hospital before, I decided I like the Prehospital setting better.
Taking your Math courses helped me to understand I.V. Therapy, which is all Math, better than I did before.
how does the level of money supply tie into the level of inflation in an economy?
i have read a few articles which state that the recent decision by the fed to buy up treasuries and mbs will cause hyper inflation, as it is going to increase the money supply. any thoughts?
This is kind of interesting because he has isolated everything to the supply side. I was always just left with the basic explanation that companies price at MR=MC and then consumers bid up or bid down based on aggregate demand at the market price point. Never really thought much about how capacity effects inflation.
The thing is, Imran produces 2 000 000 cupcakes a year and only sells maybe a fourth of that. He still pays money for those other cupcakes, but they go to waste, so he'd be losing money.
takalotopopo 7 months ago
@takalotopopo The "cost of good sold" takes into account the price of all the cupcakes made, whether or not they are sold. That amount is subtracted form the revenue, and it doesn't change when the number of cupcakes sold changes. The reason he doesn't lose money is that he makes a profit with the cupcakes he does sell, enough to cover the total cost of production.
reenerbug 7 months ago
@reenerbug oh... whoops, haha. Thanks :).
takalotopopo 6 months ago
awesome video! but i was wondering how this would be in the case of a business that sells different products at varying prices
pc815 10 months ago
Great information, but please please please give this in higher quality
junkman5555 1 year ago
Nicotine in cupcakes -priceless! lol ^-^
fzshinobi 1 year ago 3
I love these videos, but at 3:36 you say Vikram is running at full capacity (which is 400'000/y) and you call it 100'000/y it seems?
Am i missing something or misreading some information? Thought id ask
WesterGod 1 year ago
excellent khan sahib (hope u knows the meanings of sahib,if not let me know!) u are awesome person & have become a role model for me too!may ALLAH the almighty bless u even more so u can bless the world more in this beautiful way!aameen!
sallu05 1 year ago
Love your videos.
Nicotine cupcakes and excess loan money on eating them. Goof stuff.
Klasanov 2 years ago
screw paying thousands of dollars going to college when we learn the same exact thing. THANK YOU KHAN!!!!!
vasaline06 2 years ago
OPEC!!!
jceja24 2 years ago
Haha I Love this man!
AllanOdu 2 years ago
Comment removed
Shikamaru608 2 years ago
I can barely see what it says on the spreaksheet, the digits are very pixelated and appear multicolored...
shaggydaplaya 2 years ago
Nicotine!!! hahahahha
jeeum 2 years ago
loves it
Lukeeeeo 2 years ago
Good job highlighting how prices increase in the short run when demand (capac util) is high. You also showed that in the long run they fall. This is seen when 2 new entrants opened shop upon recognizing Sal's Cupcakes was enjoying an "economic profit," depicting an increase in "capacity."
The last 3 minutes of video though you forget to mention the LONG term effects of prices falling once investment and the arrival of new entrants take place.
BigBruddah101 2 years ago 5
Comment removed
BigBruddah101 2 years ago
Your brief reference of how perceived increases in income came via cheap credit, perfectly explains why demand is now down.
Not enough commentary space to fully explain, but you likely know what is entailed: government intervention creates distortion. Capac Util/Demand increases. Prices increase in short run. Supply increases in long run. Distortion is later exposed/removed, demand shifts back to original position. Too many new entrants entered the market, prices fall until firms go BK.
BigBruddah101 2 years ago
This comment has received too many negative votes show
I felt like I wasted 30 minutes. You don't talk about the money supply so this isn't about inflation.
dlix 2 years ago
put the link in the info please so we lazy americans can click on it.
shakaama 2 years ago
That's why I do my job...b/c it gives me joy to help people through an emergency.
You don't get rich from being a paramedic, but I don't want to be a doctor of Emergency Medicine, which would make me more money than working on the ambulance.
Having worked in a hospital before, I decided I like the Prehospital setting better.
Taking your Math courses helped me to understand I.V. Therapy, which is all Math, better than I did before.
vickiormindyb 2 years ago
why do you use bollywood stars names Sal? Although I know your real name is sal
dietsnapple89 2 years ago
how does the level of money supply tie into the level of inflation in an economy?
i have read a few articles which state that the recent decision by the fed to buy up treasuries and mbs will cause hyper inflation, as it is going to increase the money supply. any thoughts?
amirakhtar 2 years ago
Khan I've never attended a class that is more informative than your videos
murdocdiesel 2 years ago 20
Cupcake Cartels beware ! great vid.
SaintCog 2 years ago
I love you KhanAcademy!!!
honestly I love the videos hehe
TheLiberalEssence 2 years ago 2
This is kind of interesting because he has isolated everything to the supply side. I was always just left with the basic explanation that companies price at MR=MC and then consumers bid up or bid down based on aggregate demand at the market price point. Never really thought much about how capacity effects inflation.
moneycrab 2 years ago 2
Well constructed presentation! What about elasticity of demand considerations? How is your banking initiative going?
emilianopickett 2 years ago
Unless the cupcakes are vanilla, I would be allergic to them.
I recently found out I'm allergic to chocolate. A terrible tragedy (sigh), since I love chocolate cake and candy-especially Butterfingers.
vickiormindyb 2 years ago 4
...great vid...kudos for bringing info to everyone...
inlakech777 2 years ago 3