 The questions like should I buy a house or rent? Should I go to college? Or should I get married? For these type of decisions, the basic cost and benefit comparison is relatively straightforward and you get yes or no answer. It's not straightforward. Sorry about it. It's a really important question and but still you could nail down to yes or no answer. But many questions, many decisions are not all or nothing propositions. So the questions like how many cans of soups should I buy? How many ramen noodle should I buy? How much money should I put in my savings account each month? And so on. So to analyze these questions properly according to neoclassical economics, we need to think marginal analysis, marginal term. Marginal means additional. So when you see marginal in economic textbooks, then think additional. Let's consider the following table regarding the relationship between the number of umbrellas produced at total cost. Assume we produce five umbrellas. What's the average cost that we're producing an umbrella, one umbrella? You have five umbrellas. The total cost is 30. So 30 divided by five, six. Suppose we can sell umbrella for $8 apiece. Should we produce another umbrella? Be careful. Even though the average cost of an umbrella is only $6, right? $30 divided by five is $6. The numbers show that the marginal cost of producing an umbrella is going up. For instance, the fifth umbrella cost $10 extra to produce. When you look at the table fourth to fifth, there is a $10 increment. $10 additional dollars, $10 marginal dollars. Even though the second umbrella only costs $2, right? From one first umbrella to second umbrella, you only need $2 more, $2 additional dollars to produce. So before you decide to produce another umbrella, which is a sixth umbrella, ask what the marginal cost would be. In the previous slide, we only look at the marginal cost, but marginal benefit is the same concept. Marginal cost, again, is the additional cost to produce additional unit of output or additional unit of an activity. On the other hand, the marginal benefit is additional benefit you get from an additional unit of activity. Here is another example of marginal analysis, marginal cost, marginal benefit. Those are all in one table here. And the next slide shows what this means and how to read this table and how to analyze the marginal cost and benefits. So we are still talking about the previous slide, the table. Up to the fourth car, the marginal benefit exceeds marginal cost. So Toyota should produce three cars, right? The rule, marginal rule is as long as marginal benefit is greater than marginal cost or equal to each other than you should, the producers should produce. For all levels of production, the total benefit is a positive. So Toyota is better off producing some numbers of cars, but total benefit is the greatest for producing three cars. So that's how you read the table. And for more information, please take a look at the book. So far in chapter one, we have talked about what the fundamental assumptions of microeconomics, rational individual behavior, cost-benefit approach to decision-making, those rational people, how they make a decision, right? You compare cost and benefits, and if benefit is greater than cost, then do it. If cost is greater than benefit, don't do it. When you calculate the cost and benefits, you also need to think of opportunity cost and the sum cost. You also need to think of opportunity cost, but you don't have to, you shouldn't include the sum cost. We also look at the positive versus normative economic analysis, and we also look at the marginal analysis, marginal benefits and marginal cost. So these are the important concepts from chapter number one. So please go over, and I'll see you next time. Bye.