00:01
All right, so we can use this graph to explain why the quote, that utility is maximized when the marginal utilities of all goods are exactly equal is wrong, right? so in reality, instead of when all goods, when the marginal utilities of all goods are exactly equal, we're going to actually want to maximize utility at the point where the last, where the marginal utilities of the last goods to enter the market are equal.
00:25
Right.
00:25
And that's this concept of where, so marginal cost and marginal benefit are essentially.
00:31
Different ways to say supply and demand, right? so the marginal cost will determine our supply, and the marginal benefit will determine how much we demand.
00:40
Right.
00:40
And so at this point, where these intersect, that's where, so this is our last unit that we're going to produce, right? so at our last unit, we want our marginal cost and marginal benefit to equal each other, right? but if we only produce at this point, then we would ignore all the surplus that occurs before we hit this point, right? so let's say at this point right here, right? so we'll say at this point of production right here.
01:05
So we're still producing at this level, right? because we are producing everything up to this point right here where the utilities are equal...