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[MUSIC PLAYING] JONATHAN GRUBER: I think the main thing an economics course can do in this day and age is get people to be a little more flexible, a little more thoughtful about decisions they make, and seeing both sides of the problem. SARAH HANSEN: Today in the podcast: seeing economics in a whole new light. JONATHAN GRUBER: I've had application, a course about demand and supply, about Kim Kardashian tweeting herself out a picture of an exercise corset, and that increased demand for exercise corsets. And so thinking about how something, where students can see it and say, "Wow, I hadn't realized that economics help me think about that problem." SARAH HANSEN: Welcome to Chalk Radio, a podcast about inspired teaching at MIT. I'm your host, Sarah Hansen, from MIT OpenCourseWare. In this episode, we'll be talking about the course 14.01 Introductory Microeconomics. This course is filled with unique and creative applications for microeconomics in our ...

[SQUEAKING] [RUSTLING] [CLICKING] JONATHAN GRUBER: OK, why don't we get started? Today, we're going to come full circle back to the first lecture. So in the first lecture, we talked by-- we started by drawing a supply and demand graph. We've now spent the last few weeks explaining where supply and demand curves come from. And now, we're going to talk about the supply and demand curves. What do they know? Do they know things? Let's find out. So, no one? No one on that? AUDIENCE: [INAUDIBLE] JONATHAN GRUBER: OK, thank you. All right. So let's start by talking about shocking the supply and demand curves. Shocking the supply and demand curves. That was a BoJack Horseman reference for those of you who missed that. OK, let's talk about shocking the supply and demand curves. So let's start with a review of the supply and demand framework that we introduced in the first lecture. So let's go back to figure 9-1. We've got the market for gasol...

[SQUEAKING] [RUSTLING] [CLICKING] JONATHAN GRUBER: OK, why don't we get started? Since I had some problems with the end of last lecture, I'm going to pick up right where things got a little dicey in the last lecture, and we're going to start over. So we're looking back at figure 7-3, which, if you remember, was the cost curves for our cost function 10 plus 5q squared. And you remember where it came from. This cost function we derived ourselves from the production function and wages and rental rates. We derived this cost function. We're now graphing the cost curves that come out of this cost function, and we're talking about profit maximization. And we're talking about measuring profit. So we're talking about perfect competition. And remember, we said that profits are revenues minus costs. That means the profits per unit are revenues per unit minus costs per unit. Revenues per unit are price, and cost per unit is average cost. So profits per...