17. Mapping Consumer Theory to Producer Theory

In this video, I introduce the isocost-isoquant graph by relying on parallel concepts from indifference curves and budget constraints from consumer behavior. This graph is the basis for understanding how production technologies relate to cost curves. As such, a good foundational understanding of isocosts and isoquants is important in the study of producer behavior.

For a list of videos and links to the YouTube videos (organized by topic), check out the Intromediate Microeconomics video web page:

http://blog.thisyoungeconomist.com/p/learn-microeconomics.html

Category:

Education

Tags:

• producer behavior
• economics lectures
• microeconomics
• isocosts
• isoquants
• cost minimization
• graphs and economics
• capital and labor as inputs
• expenditure minimization
• the cost function
• tutorial

[MeganSpikeLover]

Hi! I just wanted to say thank you soo so much for making these videos!! I have beeen watching them and they explain the concepts so well and makes the material very easy to understand. I unfortunately have a professor who has problems speaking english and it has been such a constant struggle to understand anything he teaches in class. Although this professor might have threatened my A average, these videos are saving my life! :)

Thanks again!! I really do appreciate it so much :D

[intromediateecon]

@MeganSpikeLover Thanks! I'm glad these videos are helpful to you.

[1099513]

quick question; when considering lumpy investments corresponding to a given avg cost function (c.f. an isoquant curve) can we use this theory to develop a dynamic algorithm based on real opt. theory to describes the optimal demand state at which to invest in a given level of capital? so minimising the time to invest is analogous to minimising cost. does that seem like a reasonable allegory? Cheers!

[intromediateecon]

@1099513 Sorry for not replying sooner. I don't think the allegory goes through, but then again, I am confused about what you mean.

One reason I don't think it goes through is because you only talk about one input (time)... the problems I talk about here are fundamentally about trading off two inputs. I'm also not sure about the link btw avg cost and the isoquant (doesn't make sense to me).

Lumpy investments and dynamic investment necessarily require a different set of mathematical tools.

[Virtuoso883]

Don't you mean anything above the budget constraint is not affordable?

[intromediateecon]

@Virtuoso883 I presume you are referring to the comment at 2:22 where I inserted the comment "That's because everything above that indifference curve is not affordable."

You're right that everything above the budget constraint isn't affordable, but that's true for every point on the budget line.

At the optimal point, it is also true that every bundle that is above the indifference curve is not affordable. That is a consequence of the tangency. That comment refers to the optimal bundle.

[Overfiend002]

These vids are great. I'm on intro to economics on the university of london and the book for it is TERRIBLE. Thanks for adding a bit of explanatory meat onto the subject

[MegaUom]

thank you so much

[Nazara2u]

Econ Minor over here and very much enjoy your videos. Please keep them coming.

[ELIASGTR]

Good work bro

[mizzthizzkakes]

Thanks a lot. My professor recommended that the class watch your videos as a supplement to help us understand the textbook better and they are helpful

[matbooker]

love your videos thanks a lot......only thing is they always take really long to load...this happen to anyone else? :S

[vidura89]

you are a god.