WEBVTT Kind: captions Language: en 00:00:11.770 --> 00:00:13.990 align:start position:0% many<00:00:12.770> students<00:00:13.220> come<00:00:13.340> to<00:00:13.550> the<00:00:13.670> Social 00:00:13.990 --> 00:00:14.000 align:start position:0% many students come to the Social 00:00:14.000 --> 00:00:16.000 align:start position:0% many students come to the Social Sciences<00:00:14.260> really<00:00:15.260> looking<00:00:15.559> forward<00:00:15.830> to 00:00:16.000 --> 00:00:16.010 align:start position:0% Sciences really looking forward to 00:00:16.010 --> 00:00:19.210 align:start position:0% Sciences really looking forward to engaging<00:00:16.430> with<00:00:16.670> ideas<00:00:17.680> then<00:00:18.680> they<00:00:18.800> discover 00:00:19.210 --> 00:00:19.220 align:start position:0% engaging with ideas then they discover 00:00:19.220 --> 00:00:20.740 align:start position:0% engaging with ideas then they discover that<00:00:19.400> they<00:00:19.580> need<00:00:19.789> to<00:00:19.970> understand<00:00:20.480> some 00:00:20.740 --> 00:00:20.750 align:start position:0% that they need to understand some 00:00:20.750 --> 00:00:23.320 align:start position:0% that they need to understand some statistics<00:00:21.440> and<00:00:21.710> they<00:00:22.430> get<00:00:22.610> nervous<00:00:22.880> and 00:00:23.320 --> 00:00:23.330 align:start position:0% statistics and they get nervous and 00:00:23.330 --> 00:00:26.880 align:start position:0% statistics and they get nervous and worried<00:00:23.920> there's<00:00:24.920> really<00:00:25.100> no<00:00:25.400> need<00:00:25.430> for<00:00:25.699> that 00:00:26.880 --> 00:00:26.890 align:start position:0% worried there's really no need for that 00:00:26.890 --> 00:00:30.400 align:start position:0% worried there's really no need for that firstly<00:00:27.890> you<00:00:28.609> need<00:00:28.640> to<00:00:28.970> appreciate<00:00:29.330> that<00:00:29.960> some 00:00:30.400 --> 00:00:30.410 align:start position:0% firstly you need to appreciate that some 00:00:30.410 --> 00:00:33.639 align:start position:0% firstly you need to appreciate that some ideas<00:00:31.010> can<00:00:31.369> only<00:00:31.580> be<00:00:31.939> understood<00:00:32.270> if<00:00:33.020> you 00:00:33.639 --> 00:00:33.649 align:start position:0% ideas can only be understood if you 00:00:33.649 --> 00:00:37.419 align:start position:0% ideas can only be understood if you understand<00:00:34.190> some<00:00:34.429> statistics<00:00:36.429> secondly 00:00:37.419 --> 00:00:37.429 align:start position:0% understand some statistics secondly 00:00:37.429 --> 00:00:39.369 align:start position:0% understand some statistics secondly you'll<00:00:38.030> discover<00:00:38.420> that<00:00:38.629> if<00:00:38.749> you<00:00:38.870> take<00:00:39.140> the 00:00:39.369 --> 00:00:39.379 align:start position:0% you'll discover that if you take the 00:00:39.379 --> 00:00:42.360 align:start position:0% you'll discover that if you take the statistics<00:00:40.010> slowly<00:00:40.420> one<00:00:41.420> step<00:00:41.449> at<00:00:41.809> a<00:00:41.870> time 00:00:42.360 --> 00:00:42.370 align:start position:0% statistics slowly one step at a time 00:00:42.370 --> 00:00:45.219 align:start position:0% statistics slowly one step at a time it's<00:00:43.370> much<00:00:43.670> less<00:00:43.940> difficult<00:00:44.479> than<00:00:44.690> you<00:00:45.199> might 00:00:45.219 --> 00:00:45.229 align:start position:0% it's much less difficult than you might 00:00:45.229 --> 00:00:49.149 align:start position:0% it's much less difficult than you might imagine<00:00:45.530> to<00:00:47.229> understand<00:00:48.229> this<00:00:48.440> we're<00:00:49.039> going 00:00:49.149 --> 00:00:49.159 align:start position:0% imagine to understand this we're going 00:00:49.159 --> 00:00:51.869 align:start position:0% imagine to understand this we're going to<00:00:49.280> look<00:00:49.429> at<00:00:49.579> one<00:00:49.909> particular<00:00:50.139> business<00:00:51.139> and 00:00:51.869 --> 00:00:51.879 align:start position:0% to look at one particular business and 00:00:51.879 --> 00:00:56.020 align:start position:0% to look at one particular business and use<00:00:52.879> a<00:00:52.989> formula<00:00:53.989> to<00:00:54.489> arrive<00:00:55.489> at<00:00:55.729> a<00:00:55.819> conclusion 00:00:56.020 --> 00:00:56.030 align:start position:0% use a formula to arrive at a conclusion 00:00:56.030 --> 00:00:58.689 align:start position:0% use a formula to arrive at a conclusion which<00:00:56.659> is<00:00:56.690> counterintuitive<00:00:57.370> something<00:00:58.370> that 00:00:58.689 --> 00:00:58.699 align:start position:0% which is counterintuitive something that 00:00:58.699 --> 00:01:01.809 align:start position:0% which is counterintuitive something that you<00:00:58.850> really<00:00:59.209> wouldn't<00:00:59.659> have<00:00:59.839> expected<00:01:00.819> and 00:01:01.809 --> 00:01:01.819 align:start position:0% you really wouldn't have expected and 00:01:01.819 --> 00:01:04.000 align:start position:0% you really wouldn't have expected and will<00:01:01.969> break<00:01:02.179> the<00:01:02.299> formula<00:01:02.780> down<00:01:02.959> take<00:01:03.859> it 00:01:04.000 --> 00:01:04.010 align:start position:0% will break the formula down take it 00:01:04.010 --> 00:01:06.880 align:start position:0% will break the formula down take it slowly<00:01:04.309> and<00:01:04.670> I'm<00:01:05.330> sure<00:01:05.600> you'll<00:01:05.810> find<00:01:05.840> that<00:01:06.740> it 00:01:06.880 --> 00:01:06.890 align:start position:0% slowly and I'm sure you'll find that it 00:01:06.890 --> 00:01:08.950 align:start position:0% slowly and I'm sure you'll find that it really<00:01:07.190> won't<00:01:07.340> be<00:01:07.520> as<00:01:07.610> difficult<00:01:07.910> as<00:01:08.450> you 00:01:08.950 --> 00:01:08.960 align:start position:0% really won't be as difficult as you 00:01:08.960 --> 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adverts where<00:01:19.790> the<00:01:20.150> business<00:01:20.630> claims<00:01:21.080> that<00:01:21.950> you<00:01:22.130> can 00:01:22.300 --> 00:01:22.310 align:start position:0% where the business claims that you can 00:01:22.310 --> 00:01:25.030 align:start position:0% where the business claims that you can get<00:01:22.490> the<00:01:22.670> best<00:01:22.970> value<00:01:23.690> by<00:01:23.900> dealing<00:01:24.290> with<00:01:24.680> them 00:01:25.030 --> 00:01:25.040 align:start position:0% get the best value by dealing with them 00:01:25.040 --> 00:01:28.360 align:start position:0% get the best value by dealing with them because<00:01:25.910> you<00:01:26.300> can<00:01:26.510> deal<00:01:26.780> directly<00:01:27.170> with<00:01:27.890> them 00:01:28.360 --> 00:01:28.370 align:start position:0% because you can deal directly with them 00:01:28.370 --> 00:01:34.660 align:start position:0% because you can deal directly with them and<00:01:28.880> cut<00:01:29.630> out<00:01:29.900> the<00:01:30.290> middleman<00:01:31.540> he<00:01:32.540> said<00:01:33.670> you 00:01:34.660 --> 00:01:34.670 align:start position:0% and cut out the middleman he said you 00:01:34.670 --> 00:01:36.400 align:start position:0% and cut out the middleman he said you cut<00:01:34.880> out<00:01:35.000> the<00:01:35.180> middleman<00:01:35.570> yeah<00:01:35.870> when<00:01:36.140> you<00:01:36.230> come 00:01:36.400 --> 00:01:36.410 align:start position:0% cut out the middleman yeah when you come 00:01:36.410 --> 00:01:39.219 align:start position:0% cut out the middleman yeah when you come to<00:01:36.530> us<00:01:36.650> direct<00:01:37.130> we<00:01:37.370> can<00:01:37.550> give<00:01:37.790> you<00:01:37.820> savings 00:01:39.219 --> 00:01:39.229 align:start position:0% to us direct we can give you savings 00:01:39.229 --> 00:01:41.020 align:start position:0% to us direct we can give you savings it's<00:01:39.409> a<00:01:39.530> really<00:01:39.920> honest<00:01:40.219> wise<00:01:40.460> to<00:01:40.700> avoid<00:01:40.820> a 00:01:41.020 --> 00:01:41.030 align:start position:0% it's a really honest wise to avoid a 00:01:41.030 --> 00:01:43.330 align:start position:0% it's a really honest wise to avoid a middleman<00:01:41.509> it'll<00:01:42.200> cost<00:01:42.500> you 00:01:43.330 --> 00:01:43.340 align:start position:0% middleman it'll cost you 00:01:43.340 --> 00:01:45.279 align:start position:0% middleman it'll cost you I'd<00:01:43.549> say<00:01:43.759> Faro<00:01:44.030> you<00:01:44.299> save<00:01:44.539> on<00:01:44.719> state<00:01:44.960> minimum 00:01:45.279 --> 00:01:45.289 align:start position:0% I'd say Faro you save on state minimum 00:01:45.289 --> 00:01:46.539 align:start position:0% I'd say Faro you save on state minimum coverage<00:01:45.680> because<00:01:45.979> we<00:01:46.100> cut<00:01:46.369> out<00:01:46.520> the 00:01:46.539 --> 00:01:46.549 align:start position:0% coverage because we cut out the 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really need and by dealing with the<00:01:54.409> manufacturer<00:01:55.220> you<00:01:55.670> avoid<00:01:56.060> all<00:01:56.420> the<00:01:56.840> costs 00:01:57.669 --> 00:01:57.679 align:start position:0% the manufacturer you avoid all the costs 00:01:57.679 --> 00:02:00.460 align:start position:0% the manufacturer you avoid all the costs of<00:01:57.890> going<00:01:58.250> through<00:01:58.640> the<00:01:58.909> middleman<00:01:59.479> who<00:02:00.259> is 00:02:00.460 --> 00:02:00.470 align:start position:0% of going through the middleman who is 00:02:00.470 --> 00:02:03.969 align:start position:0% of going through the middleman who is simply<00:02:00.920> a<00:02:01.299> parasite<00:02:02.299> he<00:02:02.960> does<00:02:03.140> nothing<00:02:03.500> useful 00:02:03.969 --> 00:02:03.979 align:start position:0% simply a parasite he does nothing useful 00:02:03.979 --> 00:02:06.399 align:start position:0% simply a parasite he does nothing useful he<00:02:04.460> contributes<00:02:05.000> nothing<00:02:05.420> was<00:02:05.810> all<00:02:05.990> you<00:02:06.140> play 00:02:06.399 --> 00:02:06.409 align:start position:0% he contributes nothing was all you play 00:02:06.409 --> 00:02:08.680 align:start position:0% he contributes nothing was all you play for<00:02:06.710> there's<00:02:07.189> a<00:02:07.280> great<00:02:07.610> mattress<00:02:08.030> no 00:02:08.680 --> 00:02:08.690 align:start position:0% for there's a great mattress no 00:02:08.690 --> 00:02:11.800 align:start position:0% for there's a great mattress no middlemen<00:02:09.220> mumbo-jumbo<00:02:10.220> one<00:02:11.180> example<00:02:11.569> of 00:02:11.800 --> 00:02:11.810 align:start position:0% middlemen mumbo-jumbo one example of 00:02:11.810 --> 00:02:15.370 align:start position:0% middlemen mumbo-jumbo one example of this<00:02:11.989> you<00:02:12.200> often<00:02:12.560> see<00:02:12.830> is<00:02:13.340> with<00:02:13.610> kitchens<00:02:14.380> go 00:02:15.370 --> 00:02:15.380 align:start position:0% this you often see is with kitchens go 00:02:15.380 --> 00:02:18.759 align:start position:0% this you often see is with kitchens go direct<00:02:16.069> to<00:02:16.190> the<00:02:16.430> kitchen<00:02:16.790> manufacturer<00:02:17.769> don't 00:02:18.759 --> 00:02:18.769 align:start position:0% direct to the kitchen manufacturer don't 00:02:18.769 --> 00:02:21.580 align:start position:0% direct to the kitchen manufacturer don't go<00:02:19.250> to<00:02:19.310> the<00:02:19.700> middleman<00:02:20.319> what<00:02:21.319> we're<00:02:21.440> going<00:02:21.560> to 00:02:21.580 --> 00:02:21.590 align:start position:0% go to the middleman what we're going to 00:02:21.590 --> 00:02:26.650 align:start position:0% go to the middleman what we're going to do<00:02:21.860> is<00:02:22.459> to<00:02:23.120> use<00:02:23.510> a<00:02:23.870> simple<00:02:24.400> formula<00:02:25.400> to<00:02:25.660> show 00:02:26.650 --> 00:02:26.660 align:start position:0% do is to use a simple formula to show 00:02:26.660 --> 00:02:30.180 align:start position:0% do is to use a simple formula to show you<00:02:26.720> that<00:02:27.709> this<00:02:27.860> idea<00:02:28.489> is<00:02:29.060> complete<00:02:29.810> nonsense 00:02:30.180 --> 00:02:30.190 align:start position:0% you that this idea is complete nonsense 00:02:30.190 --> 00:02:33.580 align:start position:0% you that this idea is complete nonsense the<00:02:31.190> middleman<00:02:31.610> is<00:02:31.970> not<00:02:32.239> a<00:02:32.560> parasite<00:02:33.560> on 00:02:33.580 --> 00:02:33.590 align:start position:0% the middleman is not a parasite on 00:02:33.590 --> 00:02:38.080 align:start position:0% the middleman is not a parasite on society<00:02:34.519> but<00:02:34.900> a<00:02:35.900> man<00:02:36.260> or<00:02:36.829> a<00:02:36.890> woman<00:02:37.489> who 00:02:38.080 --> 00:02:38.090 align:start position:0% society but a man or a woman who 00:02:38.090 --> 00:02:42.400 align:start position:0% society but a man or a woman who performs<00:02:38.870> a<00:02:39.079> valuable<00:02:40.090> function<00:02:41.090> in<00:02:41.690> keeping 00:02:42.400 --> 00:02:42.410 align:start position:0% performs a valuable function in keeping 00:02:42.410 --> 00:02:48.099 align:start position:0% performs a valuable function in keeping costs<00:02:42.799> down<00:02:46.060> before<00:02:47.060> we<00:02:47.150> come<00:02:47.329> to<00:02:47.359> the<00:02:47.630> formula 00:02:48.099 --> 00:02:48.109 align:start position:0% costs down before we come to the formula 00:02:48.109 --> 00:02:50.500 align:start position:0% costs down before we come to the formula you<00:02:48.590> need<00:02:48.799> to<00:02:48.980> understand<00:02:49.549> the<00:02:49.700> idea<00:02:49.730> of<00:02:50.180> what 00:02:50.500 --> 00:02:50.510 align:start position:0% you need to understand the idea of what 00:02:50.510 --> 00:02:54.220 align:start position:0% you need to understand the idea of what we<00:02:50.690> call<00:02:50.900> transactions<00:02:51.739> costs<00:02:52.660> any<00:02:53.660> business 00:02:54.220 --> 00:02:54.230 align:start position:0% we call transactions costs any business 00:02:54.230 --> 00:02:55.960 align:start position:0% we call transactions costs any business as<00:02:54.440> some<00:02:54.680> costs<00:02:55.069> which<00:02:55.220> are<00:02:55.340> directly<00:02:55.760> related 00:02:55.960 --> 00:02:55.970 align:start position:0% as some costs which are directly related 00:02:55.970 --> 00:02:58.599 align:start position:0% as some costs which are directly related to<00:02:56.299> the<00:02:56.540> manufacturing<00:02:57.260> process<00:02:57.859> but<00:02:58.430> there 00:02:58.599 --> 00:02:58.609 align:start position:0% to the manufacturing process but there 00:02:58.609 --> 00:03:02.080 align:start position:0% to the manufacturing process but there are<00:02:58.730> other<00:02:58.940> costs<00:02:59.480> to<00:03:00.579> transactions<00:03:01.579> costs 00:03:02.080 --> 00:03:02.090 align:start position:0% are other costs to transactions costs 00:03:02.090 --> 00:03:04.030 align:start position:0% are other costs to transactions costs are<00:03:02.359> the<00:03:02.600> costs<00:03:02.989> associated<00:03:03.620> with<00:03:03.799> the 00:03:04.030 --> 00:03:04.040 align:start position:0% are the costs associated with the 00:03:04.040 --> 00:03:07.090 align:start position:0% are the costs associated with the exchange<00:03:04.579> process<00:03:05.680> you<00:03:06.680> have<00:03:06.829> to<00:03:06.950> have 00:03:07.090 --> 00:03:07.100 align:start position:0% exchange process you have to have 00:03:07.100 --> 00:03:10.030 align:start position:0% exchange process you have to have somebody<00:03:07.480> advertising<00:03:08.560> somebody<00:03:09.560> producing 00:03:10.030 --> 00:03:10.040 align:start position:0% somebody advertising somebody producing 00:03:10.040 --> 00:03:12.420 align:start position:0% somebody advertising somebody producing price<00:03:10.340> lists<00:03:10.910> somebody<00:03:11.780> going<00:03:11.989> around 00:03:12.420 --> 00:03:12.430 align:start position:0% price lists somebody going around 00:03:12.430 --> 00:03:15.340 align:start position:0% price lists somebody going around negotiating<00:03:13.430> deals<00:03:13.670> and<00:03:14.060> so<00:03:14.269> on<00:03:14.420> these<00:03:15.290> are 00:03:15.340 --> 00:03:15.350 align:start position:0% negotiating deals and so on these are 00:03:15.350 --> 00:03:17.860 align:start position:0% negotiating deals and so on these are the<00:03:15.620> cost<00:03:15.980> new<00:03:16.310> directly<00:03:17.030> associated<00:03:17.690> with 00:03:17.860 --> 00:03:17.870 align:start position:0% the cost new directly associated with 00:03:17.870 --> 00:03:20.610 align:start position:0% the cost new directly associated with the<00:03:18.109> production<00:03:18.500> of<00:03:18.739> the<00:03:18.920> good<00:03:19.160> that<00:03:19.940> we<00:03:20.120> call 00:03:20.610 --> 00:03:20.620 align:start position:0% the production of the good that we call 00:03:20.620 --> 00:03:24.849 align:start position:0% the production of the good that we call transactions<00:03:21.620> costs<00:03:23.230> the<00:03:24.230> guy<00:03:24.410> who<00:03:24.470> started 00:03:24.849 --> 00:03:24.859 align:start position:0% transactions costs the guy who started 00:03:24.859 --> 00:03:27.210 align:start position:0% transactions costs the guy who started this<00:03:25.190> business<00:03:25.639> a<00:03:25.819> decade<00:03:26.389> or<00:03:26.599> so<00:03:26.630> ago 00:03:27.210 --> 00:03:27.220 align:start position:0% this business a decade or so ago 00:03:27.220 --> 00:03:29.650 align:start position:0% this business a decade or so ago actually<00:03:28.220> produced<00:03:28.700> the<00:03:28.819> kitchen<00:03:29.269> units 00:03:29.650 --> 00:03:29.660 align:start position:0% actually produced the kitchen units 00:03:29.660 --> 00:03:32.559 align:start position:0% actually produced the kitchen units himself<00:03:30.170> originally<00:03:30.889> now<00:03:31.849> he<00:03:31.910> spends<00:03:32.420> his 00:03:32.559 --> 00:03:32.569 align:start position:0% himself originally now he spends his 00:03:32.569 --> 00:03:34.569 align:start position:0% himself originally now he spends his time<00:03:32.630> going<00:03:33.109> around<00:03:33.319> discussing<00:03:34.250> with 00:03:34.569 --> 00:03:34.579 align:start position:0% time going around discussing with 00:03:34.579 --> 00:03:36.900 align:start position:0% time going around discussing with customers<00:03:35.180> drawing<00:03:35.930> up<00:03:36.079> what<00:03:36.260> they<00:03:36.440> need 00:03:36.900 --> 00:03:36.910 align:start position:0% customers drawing up what they need 00:03:36.910 --> 00:03:39.870 align:start position:0% customers drawing up what they need discussing<00:03:37.910> a<00:03:38.030> price<00:03:38.329> and<00:03:38.780> so<00:03:39.200> on 00:03:39.870 --> 00:03:39.880 align:start position:0% discussing a price and so on 00:03:39.880 --> 00:03:44.060 align:start position:0% discussing a price and so on we<00:03:40.840> are<00:03:41.140> producing<00:03:41.560> all<00:03:42.430> kind<00:03:43.240> of<00:03:43.330> furniture 00:03:44.060 --> 00:03:44.070 align:start position:0% we are producing all kind of furniture 00:03:44.070 --> 00:03:48.810 align:start position:0% we are producing all kind of furniture kitchens<00:03:45.070> bedrooms<00:03:46.710> office<00:03:47.710> furniture<00:03:48.070> I 00:03:48.810 --> 00:03:48.820 align:start position:0% kitchens bedrooms office furniture I 00:03:48.820 --> 00:03:51.510 align:start position:0% kitchens bedrooms office furniture I don't<00:03:49.330> I<00:03:49.510> don't<00:03:49.630> work<00:03:49.960> any<00:03:50.260> longer<00:03:50.680> here<00:03:51.490> in 00:03:51.510 --> 00:03:51.520 align:start position:0% don't I don't work any longer here in 00:03:51.520 --> 00:03:54.180 align:start position:0% don't I don't work any longer here in the<00:03:51.730> workshop<00:03:51.910> I<00:03:52.390> do<00:03:52.810> a<00:03:52.990> lot<00:03:53.260> of<00:03:53.410> the<00:03:53.620> design 00:03:54.180 --> 00:03:54.190 align:start position:0% the workshop I do a lot of the design 00:03:54.190 --> 00:03:57.980 align:start position:0% the workshop I do a lot of the design work<00:03:54.400> speaking<00:03:54.880> in<00:03:55.180> with<00:03:55.420> people<00:03:55.630> and 00:03:57.980 --> 00:03:57.990 align:start position:0% 00:03:57.990 --> 00:04:01.790 align:start position:0% contacts<00:03:58.990> with<00:03:59.170> the<00:03:59.710> customers<00:04:00.130> when<00:04:00.700> this 00:04:01.790 --> 00:04:01.800 align:start position:0% contacts with the customers when this 00:04:01.800 --> 00:04:04.910 align:start position:0% contacts with the customers when this work<00:04:02.800> is<00:04:03.010> done<00:04:03.280> it's<00:04:03.670> usually<00:04:03.820> about<00:04:04.300> a<00:04:04.360> week 00:04:04.910 --> 00:04:04.920 align:start position:0% work is done it's usually about a week 00:04:04.920 --> 00:04:10.590 align:start position:0% work is done it's usually about a week we<00:04:05.920> can<00:04:06.130> begin<00:04:06.730> the<00:04:07.360> work<00:04:07.590> to<00:04:08.590> produce<00:04:09.600> these 00:04:10.590 --> 00:04:10.600 align:start position:0% we can begin the work to produce these 00:04:10.600 --> 00:04:12.600 align:start position:0% we can begin the work to produce these are<00:04:10.840> the<00:04:10.930> transactions<00:04:11.620> costs<00:04:12.040> which<00:04:12.190> always 00:04:12.600 --> 00:04:12.610 align:start position:0% are the transactions costs which always 00:04:12.610 --> 00:04:14.940 align:start position:0% are the transactions costs which always have<00:04:12.820> to<00:04:12.970> be<00:04:13.090> met<00:04:13.360> when<00:04:13.810> you<00:04:13.960> buy<00:04:14.170> any<00:04:14.500> good<00:04:14.830> or 00:04:14.940 --> 00:04:14.950 align:start position:0% have to be met when you buy any good or 00:04:14.950 --> 00:04:18.479 align:start position:0% have to be met when you buy any good or service<00:04:15.570> what<00:04:16.570> we're<00:04:16.750> going<00:04:16.930> to<00:04:17.020> see<00:04:17.350> is<00:04:18.190> that 00:04:18.479 --> 00:04:18.489 align:start position:0% service what we're going to see is that 00:04:18.489 --> 00:04:21.090 align:start position:0% service what we're going to see is that the<00:04:18.700> middleman<00:04:19.210> is<00:04:19.780> actually<00:04:20.530> somebody<00:04:20.830> who 00:04:21.090 --> 00:04:21.100 align:start position:0% the middleman is actually somebody who 00:04:21.100 --> 00:04:24.300 align:start position:0% the middleman is actually somebody who plays<00:04:21.550> a<00:04:21.580> valuable<00:04:22.120> rock<00:04:22.750> for<00:04:23.110> society<00:04:23.740> in 00:04:24.300 --> 00:04:24.310 align:start position:0% plays a valuable rock for society in 00:04:24.310 --> 00:04:29.330 align:start position:0% plays a valuable rock for society in minimizing<00:04:25.150> such<00:04:26.050> transactions<00:04:26.830> costs 00:04:29.330 --> 00:04:29.340 align:start position:0% minimizing such transactions costs 00:04:29.340 --> 00:04:32.220 align:start position:0% minimizing such transactions costs whenever<00:04:30.340> people<00:04:30.580> buy<00:04:30.880> and<00:04:31.120> sell<00:04:31.360> they<00:04:31.840> engage 00:04:32.220 --> 00:04:32.230 align:start position:0% whenever people buy and sell they engage 00:04:32.230 --> 00:04:35.640 align:start position:0% whenever people buy and sell they engage in<00:04:32.530> an<00:04:32.740> exchange<00:04:33.720> in<00:04:34.720> an<00:04:34.900> advanced<00:04:35.530> economy 00:04:35.640 --> 00:04:35.650 align:start position:0% in an exchange in an advanced economy 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where we<00:04:43.360> only<00:04:43.540> barter<00:04:44.260> that<00:04:45.070> is<00:04:45.310> exchange<00:04:46.090> goods 00:04:46.530 --> 00:04:46.540 align:start position:0% we only barter that is exchange goods 00:04:46.540 --> 00:04:50.159 align:start position:0% we only barter that is exchange goods without<00:04:46.960> money 00:04:50.159 --> 00:04:50.169 align:start position:0% 00:04:50.169 --> 00:04:52.649 align:start position:0% at<00:04:51.099> the<00:04:51.219> moment<00:04:51.580> there<00:04:51.699> are<00:04:51.729> only<00:04:51.819> two<00:04:52.389> of<00:04:52.419> us 00:04:52.649 --> 00:04:52.659 align:start position:0% at the moment there are only two of us 00:04:52.659 --> 00:04:55.459 align:start position:0% at the moment there are only two of us on<00:04:52.870> the<00:04:52.990> island<00:04:53.139> I<00:04:53.620> grow<00:04:54.610> olives 00:04:55.459 --> 00:04:55.469 align:start position:0% on the island I grow olives 00:04:55.469 --> 00:04:59.459 align:start position:0% on the island I grow olives Theodore<00:04:56.469> grows<00:04:56.800> apples<00:04:57.159> I<00:04:57.960> want<00:04:58.960> some<00:04:59.169> of<00:04:59.319> his 00:04:59.459 --> 00:04:59.469 align:start position:0% Theodore grows apples I want some of his 00:04:59.469 --> 00:05:03.209 align:start position:0% Theodore grows apples I want some of his apples<00:04:59.879> he<00:05:00.879> wants<00:05:01.150> some<00:05:01.330> of<00:05:01.449> my<00:05:01.599> olives<00:05:02.069> so<00:05:03.069> we 00:05:03.209 --> 00:05:03.219 align:start position:0% apples he wants some of my olives so we 00:05:03.219 --> 00:05:08.580 align:start position:0% apples he wants some of my olives so we exchange<00:05:05.699> best<00:05:06.719> olives<00:05:07.719> I've<00:05:07.990> got<00:05:08.229> are<00:05:08.349> there 00:05:08.580 --> 00:05:08.590 align:start position:0% exchange best olives I've got are there 00:05:08.590 --> 00:05:10.890 align:start position:0% exchange best olives I've got are there a<00:05:08.620> bit<00:05:08.770> of<00:05:08.800> sand<00:05:09.069> on<00:05:09.279> them<00:05:09.460> but<00:05:09.580> but<00:05:09.849> these<00:05:10.749> are 00:05:10.890 --> 00:05:10.900 align:start position:0% a bit of sand on them but but these are 00:05:10.900 --> 00:05:14.339 align:start position:0% a bit of sand on them but but these are quality<00:05:11.319> olives<00:05:12.240> kilo<00:05:13.240> of<00:05:13.270> my<00:05:13.659> olives<00:05:14.080> for 00:05:14.339 --> 00:05:14.349 align:start position:0% quality olives kilo of my olives for 00:05:14.349 --> 00:05:17.610 align:start position:0% quality olives kilo of my olives for fibre<00:05:14.740> you're<00:05:15.039> honest<00:05:16.169> they<00:05:17.169> can<00:05:17.379> give<00:05:17.529> you 00:05:17.610 --> 00:05:17.620 align:start position:0% fibre you're honest they can give you 00:05:17.620 --> 00:05:22.019 align:start position:0% fibre you're honest they can give you only<00:05:17.650> three<00:05:18.039> apples<00:05:18.659> three<00:05:19.659> yeah<00:05:20.909> well<00:05:21.909> it 00:05:22.019 --> 00:05:22.029 align:start position:0% only three apples three yeah well it 00:05:22.029 --> 00:05:23.339 align:start position:0% only three apples three yeah well it took<00:05:22.150> me<00:05:22.300> a<00:05:22.330> long<00:05:22.389> time<00:05:22.449> there<00:05:22.719> are<00:05:22.779> four 00:05:23.339 --> 00:05:23.349 align:start position:0% took me a long time there are four 00:05:23.349 --> 00:05:26.610 align:start position:0% took me a long time there are four yeah<00:05:23.889> but<00:05:24.099> take<00:05:24.250> a<00:05:24.279> look<00:05:24.460> at<00:05:24.639> this<00:05:24.759> able<00:05:25.620> to 00:05:26.610 --> 00:05:26.620 align:start position:0% yeah but take a look at this able to 00:05:26.620 --> 00:05:29.580 align:start position:0% yeah but take a look at this able to you're<00:05:26.830> a<00:05:26.860> hard<00:05:27.219> man<00:05:28.050> but<00:05:29.050> there<00:05:29.229> are<00:05:29.349> some 00:05:29.580 --> 00:05:29.590 align:start position:0% you're a hard man but there are some 00:05:29.590 --> 00:05:31.709 align:start position:0% you're a hard man but there are some transactions<00:05:30.310> costs<00:05:30.699> associated<00:05:31.150> with<00:05:31.449> the 00:05:31.709 --> 00:05:31.719 align:start position:0% transactions costs associated with the 00:05:31.719 --> 00:05:34.129 align:start position:0% transactions costs associated with the exchange<00:05:32.229> we<00:05:32.949> have<00:05:33.129> to<00:05:33.279> arrange<00:05:33.639> to<00:05:33.939> meet 00:05:34.129 --> 00:05:34.139 align:start position:0% exchange we have to arrange to meet 00:05:34.139 --> 00:05:40.140 align:start position:0% exchange we have to arrange to meet agree<00:05:35.139> a<00:05:35.169> rate<00:05:35.560> of<00:05:35.590> exchange<00:05:36.009> and<00:05:36.639> someone<00:05:39.150> but 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and wants to exchange her fish with 00:05:48.430 --> 00:05:49.170 align:start position:0% fish and wants to exchange her fish with our<00:05:48.610> goods 00:05:49.170 --> 00:05:49.180 align:start position:0% our goods 00:05:49.180 --> 00:05:54.800 align:start position:0% our goods how<00:05:50.080> many<00:05:50.370> exchanges<00:05:51.370> on<00:05:51.610> our<00:05:52.060> island<00:05:52.629> now 00:05:54.800 --> 00:05:54.810 align:start position:0% how many exchanges on our island now 00:05:54.810 --> 00:05:59.370 align:start position:0% how many exchanges on our island now Theodore<00:05:56.129> exchanges<00:05:57.129> with<00:05:57.400> Mariela 00:05:59.370 --> 00:05:59.380 align:start position:0% Theodore exchanges with Mariela 00:05:59.380 --> 00:06:03.410 align:start position:0% Theodore exchanges with Mariela I<00:05:59.730> exchanged<00:06:00.730> with<00:06:00.970> Theodore<00:06:02.130> Marielle 00:06:03.410 --> 00:06:03.420 align:start position:0% I exchanged with Theodore Marielle 00:06:03.420 --> 00:06:06.300 align:start position:0% I exchanged with Theodore Marielle exchanges<00:06:04.420> with<00:06:04.600> me<00:06:04.840> so<00:06:05.590> there<00:06:05.800> are<00:06:05.920> three 00:06:06.300 --> 00:06:06.310 align:start position:0% exchanges with me so there are three 00:06:06.310 --> 00:06:09.170 align:start position:0% exchanges with me so there are three exchanges<00:06:06.820> each<00:06:07.690> one<00:06:08.050> with<00:06:08.650> The<00:06:08.770> Associated 00:06:09.170 --> 00:06:09.180 align:start position:0% exchanges each one with The Associated 00:06:09.180 --> 00:06:11.390 align:start position:0% exchanges each one with The Associated transactions<00:06:10.180> costs 00:06:11.390 --> 00:06:11.400 align:start position:0% transactions costs 00:06:11.400 --> 00:06:15.020 align:start position:0% transactions costs how<00:06:12.400> many<00:06:12.580> exchanges<00:06:13.390> if<00:06:13.690> a<00:06:14.320> fourth<00:06:14.620> person 00:06:15.020 --> 00:06:15.030 align:start position:0% how many exchanges if a fourth person 00:06:15.030 --> 00:06:18.090 align:start position:0% how many exchanges if a fourth person Damion<00:06:16.030> joins<00:06:16.390> us<00:06:16.660> who<00:06:17.320> specializes<00:06:18.070> in 00:06:18.090 --> 00:06:18.100 align:start position:0% Damion joins us who specializes in 00:06:18.100 --> 00:06:24.150 align:start position:0% Damion joins us who specializes in tomatoes<00:06:21.900> suppose<00:06:22.900> we<00:06:23.050> go<00:06:23.230> to<00:06:23.290> a<00:06:23.410> hundred<00:06:24.010> of 00:06:24.150 --> 00:06:24.160 align:start position:0% tomatoes suppose we go to a hundred of 00:06:24.160 --> 00:06:26.490 align:start position:0% tomatoes suppose we go to a hundred of us<00:06:24.190> each<00:06:24.840> specializing<00:06:25.840> in<00:06:25.960> some<00:06:26.230> different 00:06:26.490 --> 00:06:26.500 align:start position:0% us each specializing in some different 00:06:26.500 --> 00:06:27.780 align:start position:0% us each specializing in some different product 00:06:27.780 --> 00:06:27.790 align:start position:0% product 00:06:27.790 --> 00:06:30.510 align:start position:0% product how<00:06:28.180> many<00:06:28.450> exchanges<00:06:28.660> then<00:06:29.290> assuming<00:06:30.130> we<00:06:30.310> each 00:06:30.510 --> 00:06:30.520 align:start position:0% how many exchanges then assuming we each 00:06:30.520 --> 00:06:32.250 align:start position:0% how many exchanges then assuming we each want<00:06:30.850> some<00:06:31.150> of<00:06:31.270> the<00:06:31.390> product<00:06:31.810> of<00:06:31.960> all<00:06:32.080> the 00:06:32.250 --> 00:06:32.260 align:start position:0% want some of the product of all the 00:06:32.260 --> 00:06:35.490 align:start position:0% want some of the product of all the others<00:06:33.300> working<00:06:34.300> out<00:06:34.570> the<00:06:34.720> answer<00:06:35.140> for<00:06:35.290> large 00:06:35.490 --> 00:06:35.500 align:start position:0% others working out the answer for large 00:06:35.500 --> 00:06:38.550 align:start position:0% others working out the answer for large numbers<00:06:36.070> is<00:06:36.220> virtually<00:06:36.760> impossible<00:06:37.560> unless 00:06:38.550 --> 00:06:38.560 align:start position:0% numbers is virtually impossible unless 00:06:38.560 --> 00:06:41.010 align:start position:0% numbers is virtually impossible unless we<00:06:38.800> do<00:06:39.010> it<00:06:39.100> by<00:06:39.310> using<00:06:39.340> a<00:06:39.880> formula<00:06:40.330> to<00:06:40.540> work<00:06:40.690> it 00:06:41.010 --> 00:06:41.020 align:start position:0% we do it by using a formula to work it 00:06:41.020 --> 00:06:44.730 align:start position:0% we do it by using a formula to work it out<00:06:42.630> we'll<00:06:43.630> let<00:06:43.780> the<00:06:43.900> number<00:06:44.170> of<00:06:44.260> people<00:06:44.620> on 00:06:44.730 --> 00:06:44.740 align:start position:0% out we'll let the number of people on 00:06:44.740 --> 00:06:48.350 align:start position:0% out we'll let the number of people on our<00:06:44.770> island<00:06:45.340> be<00:06:45.580> represented<00:06:46.270> by<00:06:46.450> a<00:06:46.480> letter<00:06:46.980> n 00:06:48.350 --> 00:06:48.360 align:start position:0% our island be represented by a letter n 00:06:48.360 --> 00:06:51.510 align:start position:0% our island be represented by a letter n will<00:06:49.360> write<00:06:49.570> it<00:06:49.720> as<00:06:49.840> a<00:06:49.900> capital<00:06:50.290> n<00:06:50.710> because<00:06:50.950> it 00:06:51.510 --> 00:06:51.520 align:start position:0% will write it as a capital n because it 00:06:51.520 --> 00:06:55.740 align:start position:0% will write it as a capital n because it could<00:06:51.700> be<00:06:51.850> a<00:06:51.880> very<00:06:52.120> large<00:06:52.390> number<00:06:52.930> so<00:06:54.660> given<00:06:55.660> we 00:06:55.740 --> 00:06:55.750 align:start position:0% could be a very large number so given we 00:06:55.750 --> 00:06:57.360 align:start position:0% could be a very large number so given we don't<00:06:55.990> know<00:06:56.200> the<00:06:56.380> number<00:06:56.680> of<00:06:56.710> people<00:06:56.800> on<00:06:57.220> the 00:06:57.360 --> 00:06:57.370 align:start position:0% don't know the number of people on the 00:06:57.370 --> 00:07:00.120 align:start position:0% don't know the number of people on the island<00:06:57.400> can<00:06:58.330> we<00:06:58.510> use<00:06:58.810> in<00:06:59.110> to<00:06:59.620> establish<00:07:00.100> a 00:07:00.120 --> 00:07:00.130 align:start position:0% island can we use in to establish a 00:07:00.130 --> 00:07:02.430 align:start position:0% island can we use in to establish a formula<00:07:00.940> that<00:07:01.120> will<00:07:01.600> tell<00:07:01.840> us<00:07:01.960> the<00:07:01.990> number<00:07:02.170> of 00:07:02.430 --> 00:07:02.440 align:start position:0% formula that will tell us the number of 00:07:02.440 --> 00:07:04.290 align:start position:0% formula that will tell us the number of exchanges<00:07:03.250> that<00:07:03.370> will<00:07:03.490> take<00:07:03.730> place<00:07:03.880> on<00:07:04.150> the 00:07:04.290 --> 00:07:04.300 align:start position:0% exchanges that will take place on the 00:07:04.300 --> 00:07:08.250 align:start position:0% exchanges that will take place on the island<00:07:05.250> each<00:07:06.250> of<00:07:06.460> the<00:07:06.610> N<00:07:06.850> people<00:07:07.570> however<00:07:07.810> many 00:07:08.250 --> 00:07:08.260 align:start position:0% island each of the N people however many 00:07:08.260 --> 00:07:11.100 align:start position:0% island each of the N people however many that<00:07:08.500> is<00:07:08.650> will<00:07:09.490> be<00:07:09.520> exchanging<00:07:10.510> with<00:07:10.750> all<00:07:10.900> the 00:07:11.100 --> 00:07:11.110 align:start position:0% that is will be exchanging with all the 00:07:11.110 --> 00:07:14.100 align:start position:0% that is will be exchanging with all the others<00:07:11.760> everyone<00:07:12.760> except<00:07:13.240> himself<00:07:13.600> or 00:07:14.100 --> 00:07:14.110 align:start position:0% others everyone except himself or 00:07:14.110 --> 00:07:19.500 align:start position:0% others everyone except himself or herself<00:07:14.290> that<00:07:14.950> is<00:07:15.130> n<00:07:15.900> minus<00:07:16.900> one<00:07:17.170> people 00:07:19.500 --> 00:07:19.510 align:start position:0% herself that is n minus one people 00:07:19.510 --> 00:07:22.680 align:start position:0% herself that is n minus one people so<00:07:19.960> we<00:07:20.080> must<00:07:20.290> multiply<00:07:20.620> the<00:07:21.040> end<00:07:21.460> people<00:07:22.180> with 00:07:22.680 --> 00:07:22.690 align:start position:0% so we must multiply the end people with 00:07:22.690 --> 00:07:26.280 align:start position:0% so we must multiply the end people with all<00:07:22.870> the<00:07:23.080> others<00:07:23.440> the<00:07:23.740> n<00:07:24.090> minus-1<00:07:25.090> people<00:07:25.510> to 00:07:26.280 --> 00:07:26.290 align:start position:0% all the others the n minus-1 people to 00:07:26.290 --> 00:07:31.360 align:start position:0% all the others the n minus-1 people to give<00:07:26.470> n<00:07:27.300> times<00:07:28.300> n<00:07:28.720> minus<00:07:28.800> one 00:07:31.360 --> 00:07:31.370 align:start position:0% give n times n minus one 00:07:31.370 --> 00:07:34.840 align:start position:0% give n times n minus one but<00:07:31.940> that<00:07:32.150> would<00:07:32.360> mean<00:07:32.660> we<00:07:33.620> count<00:07:33.949> my<00:07:34.400> exchange 00:07:34.840 --> 00:07:34.850 align:start position:0% but that would mean we count my exchange 00:07:34.850 --> 00:07:39.100 align:start position:0% but that would mean we count my exchange with<00:07:35.300> Theodore<00:07:35.960> as<00:07:36.229> one<00:07:36.979> exchange<00:07:37.520> and<00:07:38.110> his 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there's 00:07:48.020 --> 00:07:50.890 align:start position:0% will be true for all exchanges there's only<00:07:48.229> half<00:07:48.380> the<00:07:49.190> number<00:07:49.550> implied<00:07:50.000> by<00:07:50.300> our<00:07:50.540> term 00:07:50.890 --> 00:07:50.900 align:start position:0% only half the number implied by our term 00:07:50.900 --> 00:07:55.480 align:start position:0% only half the number implied by our term n<00:07:51.229> times<00:07:52.040> n<00:07:52.280> minus<00:07:52.310> one<00:07:52.880> so<00:07:53.840> now<00:07:54.169> we<00:07:54.229> divide<00:07:54.710> n 00:07:55.480 --> 00:07:55.490 align:start position:0% n times n minus one so now we divide n 00:07:55.490 --> 00:07:59.469 align:start position:0% n times n minus one so now we divide n times<00:07:56.240> n<00:07:56.419> minus<00:07:56.449> one<00:07:56.990> by<00:07:57.830> two<00:07:58.000> to<00:07:59.000> correct<00:07:59.330> for 00:07:59.469 --> 00:07:59.479 align:start position:0% times n minus one by two to correct for 00:07:59.479 --> 00:08:01.720 align:start position:0% times n minus one by two to correct for that 00:08:01.720 --> 00:08:01.730 align:start position:0% 00:08:01.730 --> 00:08:04.600 align:start position:0% now<00:08:02.420> that<00:08:02.570> we<00:08:02.720> have<00:08:02.870> our<00:08:03.020> formula<00:08:03.350> we<00:08:04.160> can<00:08:04.370> set 00:08:04.600 --> 00:08:04.610 align:start position:0% now that we have our formula we can set 00:08:04.610 --> 00:08:07.240 align:start position:0% now that we have our formula we can set n<00:08:04.910> to<00:08:05.210> any<00:08:05.450> number<00:08:05.750> we<00:08:05.990> choose<00:08:06.290> to<00:08:06.800> see<00:08:06.980> how 00:08:07.240 --> 00:08:07.250 align:start position:0% n to any number we choose to see how 00:08:07.250 --> 00:08:09.460 align:start position:0% n to any number we choose to see how many<00:08:07.310> exchanges<00:08:08.270> there<00:08:08.480> are<00:08:08.660> for<00:08:09.290> any 00:08:09.460 --> 00:08:09.470 align:start position:0% many exchanges there are for any 00:08:09.470 --> 00:08:14.110 align:start position:0% many exchanges there are for any particular<00:08:09.710> economy<00:08:11.320> so<00:08:12.320> for<00:08:12.560> my<00:08:13.120> four-person 00:08:14.110 --> 00:08:14.120 align:start position:0% particular economy so for my four-person 00:08:14.120 --> 00:08:19.140 align:start position:0% particular economy so for my four-person economy<00:08:14.720> on<00:08:14.840> our<00:08:14.990> island<00:08:15.670> we<00:08:16.670> have<00:08:17.000> N<00:08:17.270> equals<00:08:17.660> 4 00:08:19.140 --> 00:08:19.150 align:start position:0% economy on our island we have N equals 4 00:08:19.150 --> 00:08:24.550 align:start position:0% economy on our island we have N equals 4 so<00:08:20.150> n<00:08:20.450> minus<00:08:20.960> 1<00:08:21.170> will<00:08:21.350> be<00:08:21.470> 3<00:08:21.500> and<00:08:22.160> we<00:08:23.030> have<00:08:23.560> 4 00:08:24.550 --> 00:08:24.560 align:start position:0% so n minus 1 will be 3 and we have 4 00:08:24.560 --> 00:08:30.120 align:start position:0% so n minus 1 will be 3 and we have 4 times<00:08:25.040> 3<00:08:26.380> divided<00:08:27.380> by<00:08:27.530> 2<00:08:27.940> is<00:08:28.940> equal<00:08:29.000> to<00:08:29.450> 6 00:08:30.120 --> 00:08:30.130 align:start position:0% times 3 divided by 2 is equal to 6 00:08:30.130 --> 00:08:37.620 align:start position:0% times 3 divided by 2 is equal to 6 exchanges<00:08:32.530> so<00:08:33.530> with<00:08:33.710> 5<00:08:34.070> people<00:08:34.430> 5<00:08:35.650> times<00:08:36.650> 4 00:08:37.620 --> 00:08:37.630 align:start position:0% exchanges so with 5 people 5 times 4 00:08:37.630 --> 00:08:41.770 align:start position:0% exchanges so with 5 people 5 times 4 which<00:08:38.630> we<00:08:38.810> then<00:08:38.960> divide<00:08:39.229> by<00:08:39.440> 2<00:08:39.610> gives<00:08:40.610> us<00:08:40.790> 10 00:08:41.770 --> 00:08:41.780 align:start position:0% which we then divide by 2 gives us 10 00:08:41.780 --> 00:08:45.460 align:start position:0% which we then divide by 2 gives us 10 exchanges<00:08:43.360> suppose<00:08:44.360> there<00:08:44.570> is<00:08:44.660> a<00:08:44.690> hundred<00:08:45.290> of 00:08:45.460 --> 00:08:45.470 align:start position:0% exchanges suppose there is a hundred of 00:08:45.470 --> 00:08:52.570 align:start position:0% exchanges suppose there is a hundred of us<00:08:46.180> then<00:08:47.180> we<00:08:47.360> have<00:08:47.660> a<00:08:48.130> hundred<00:08:49.130> times<00:08:50.120> 99<00:08:51.580> which 00:08:52.570 --> 00:08:52.580 align:start position:0% us then we have a hundred times 99 which 00:08:52.580 --> 00:08:55.480 align:start position:0% us then we have a hundred times 99 which we<00:08:52.730> then<00:08:52.910> divide<00:08:53.210> by<00:08:53.450> two<00:08:53.530> gives<00:08:54.530> us<00:08:54.710> four 00:08:55.480 --> 00:08:55.490 align:start position:0% we then divide by two gives us four 00:08:55.490 --> 00:08:58.500 align:start position:0% we then divide by two gives us four thousand<00:08:56.060> nine<00:08:56.240> hundred<00:08:56.810> and<00:08:57.380> fifty 00:08:58.500 --> 00:08:58.510 align:start position:0% thousand nine hundred and fifty 00:08:58.510 --> 00:09:03.820 align:start position:0% thousand nine hundred and fifty exchanges<00:09:01.450> our<00:09:02.450> formula<00:09:03.020> helps<00:09:03.230> us<00:09:03.500> to<00:09:03.650> see 00:09:03.820 --> 00:09:03.830 align:start position:0% exchanges our formula helps us to see 00:09:03.830 --> 00:09:05.800 align:start position:0% exchanges our formula helps us to see how<00:09:04.010> quickly<00:09:04.340> the<00:09:04.610> number<00:09:04.760> of<00:09:05.000> exchanges<00:09:05.240> and 00:09:05.800 --> 00:09:05.810 align:start position:0% how quickly the number of exchanges and 00:09:05.810 --> 00:09:07.930 align:start position:0% how quickly the number of exchanges and hence<00:09:06.290> the<00:09:06.530> amount<00:09:06.800> of<00:09:06.920> transactions<00:09:07.640> cost 00:09:07.930 --> 00:09:07.940 align:start position:0% hence the amount of transactions cost 00:09:07.940 --> 00:09:10.630 align:start position:0% hence the amount of transactions cost rises<00:09:08.600> as<00:09:08.810> the<00:09:09.080> numbers<00:09:09.680> in<00:09:09.830> our<00:09:09.920> society 00:09:10.630 --> 00:09:10.640 align:start position:0% rises as the numbers in our society 00:09:10.640 --> 00:09:14.470 align:start position:0% rises as the numbers in our society increase<00:09:12.250> but<00:09:13.250> now<00:09:13.400> before<00:09:13.760> we<00:09:13.910> develop<00:09:14.330> the 00:09:14.470 --> 00:09:14.480 align:start position:0% increase but now before we develop the 00:09:14.480 --> 00:09:16.900 align:start position:0% increase but now before we develop the idea<00:09:14.870> just<00:09:15.620> let<00:09:15.830> me<00:09:15.950> remind<00:09:16.370> you<00:09:16.640> of<00:09:16.760> the 00:09:16.900 --> 00:09:16.910 align:start position:0% idea just let me remind you of the 00:09:16.910 --> 00:09:18.430 align:start position:0% idea just let me remind you of the importance<00:09:17.390> of<00:09:17.540> putting<00:09:17.690> the<00:09:17.960> brackets 00:09:18.430 --> 00:09:18.440 align:start position:0% importance of putting the brackets 00:09:18.440 --> 00:09:21.370 align:start position:0% importance of putting the brackets around<00:09:18.560> that<00:09:18.860> term<00:09:19.160> n<00:09:19.430> minus<00:09:20.000> 1<00:09:20.210> without<00:09:21.140> it 00:09:21.370 --> 00:09:21.380 align:start position:0% around that term n minus 1 without it 00:09:21.380 --> 00:09:24.600 align:start position:0% around that term n minus 1 without it we'd<00:09:22.010> have<00:09:22.160> something<00:09:22.430> completely<00:09:23.300> different 00:09:24.600 --> 00:09:24.610 align:start position:0% we'd have something completely different 00:09:24.610 --> 00:09:28.750 align:start position:0% we'd have something completely different our<00:09:25.610> formula<00:09:26.330> without<00:09:26.720> brackets<00:09:27.550> would<00:09:28.550> now 00:09:28.750 --> 00:09:28.760 align:start position:0% our formula without brackets would now 00:09:28.760 --> 00:09:35.970 align:start position:0% our formula without brackets would now be<00:09:28.940> written<00:09:29.150> as<00:09:29.510> n<00:09:30.370> times<00:09:31.370> n<00:09:31.940> minus<00:09:32.770> 1<00:09:33.790> over<00:09:34.790> 2 00:09:35.970 --> 00:09:35.980 align:start position:0% be written as n times n minus 1 over 2 00:09:35.980 --> 00:09:38.590 align:start position:0% be written as n times n minus 1 over 2 as<00:09:36.980> you<00:09:37.130> probably<00:09:37.370> know<00:09:37.910> there's<00:09:38.510> a 00:09:38.590 --> 00:09:38.600 align:start position:0% as you probably know there's a 00:09:38.600 --> 00:09:41.020 align:start position:0% as you probably know there's a mathematical<00:09:39.410> convention<00:09:40.010> that<00:09:40.550> says<00:09:40.790> when 00:09:41.020 --> 00:09:41.030 align:start position:0% mathematical convention that says when 00:09:41.030 --> 00:09:42.790 align:start position:0% mathematical convention that says when there's<00:09:41.240> a<00:09:41.330> series<00:09:41.780> of<00:09:41.960> operations<00:09:42.320> to<00:09:42.770> be 00:09:42.790 --> 00:09:42.800 align:start position:0% there's a series of operations to be 00:09:42.800 --> 00:09:45.220 align:start position:0% there's a series of operations to be performed<00:09:43.150> we<00:09:44.150> stick<00:09:44.450> with<00:09:44.480> a<00:09:44.780> particular 00:09:45.220 --> 00:09:45.230 align:start position:0% performed we stick with a particular 00:09:45.230 --> 00:09:50.610 align:start position:0% performed we stick with a particular order<00:09:46.510> what's<00:09:47.510> in<00:09:47.720> the<00:09:47.840> brackets<00:09:48.050> comes<00:09:48.680> first 00:09:50.610 --> 00:09:50.620 align:start position:0% order what's in the brackets comes first 00:09:50.620 --> 00:09:54.900 align:start position:0% order what's in the brackets comes first but<00:09:50.860> we<00:09:51.040> multiply<00:09:51.760> before<00:09:52.510> we<00:09:52.810> subtract<00:09:53.910> so 00:09:54.900 --> 00:09:54.910 align:start position:0% but we multiply before we subtract so 00:09:54.910 --> 00:09:58.880 align:start position:0% but we multiply before we subtract so the<00:09:55.060> top<00:09:55.330> line<00:09:55.570> would<00:09:55.930> become<00:09:56.640> n<00:09:57.640> times<00:09:58.150> n<00:09:58.510> or<00:09:58.840> n 00:09:58.880 --> 00:09:58.890 align:start position:0% the top line would become n times n or n 00:09:58.890 --> 00:10:02.310 align:start position:0% the top line would become n times n or n squared<00:09:59.890> and<00:10:00.190> then<00:10:00.880> after<00:10:01.330> that<00:10:01.480> we<00:10:02.140> would 00:10:02.310 --> 00:10:02.320 align:start position:0% squared and then after that we would 00:10:02.320 --> 00:10:06.300 align:start position:0% squared and then after that we would subtract<00:10:02.830> one<00:10:03.540> so<00:10:04.540> this<00:10:04.690> gives<00:10:04.930> us<00:10:05.140> N<00:10:05.800> squared 00:10:06.300 --> 00:10:06.310 align:start position:0% subtract one so this gives us N squared 00:10:06.310 --> 00:10:11.480 align:start position:0% subtract one so this gives us N squared minus<00:10:06.930> one<00:10:08.310> over<00:10:09.310> two 00:10:11.480 --> 00:10:11.490 align:start position:0% minus one over two 00:10:11.490 --> 00:10:13.670 align:start position:0% minus one over two so<00:10:11.820> in<00:10:11.970> our<00:10:12.060> society<00:10:12.720> with<00:10:12.960> a<00:10:12.990> hundred<00:10:13.290> people 00:10:13.670 --> 00:10:13.680 align:start position:0% so in our society with a hundred people 00:10:13.680 --> 00:10:17.720 align:start position:0% so in our society with a hundred people if<00:10:14.070> we<00:10:14.460> use<00:10:14.760> this<00:10:15.110> incorrect<00:10:16.110> formula<00:10:16.730> we 00:10:17.720 --> 00:10:17.730 align:start position:0% if we use this incorrect formula we 00:10:17.730 --> 00:10:20.530 align:start position:0% if we use this incorrect formula we would<00:10:17.880> get<00:10:18.149> a<00:10:18.589> hundred<00:10:19.589> times<00:10:20.070> a<00:10:20.250> hundred 00:10:20.530 --> 00:10:20.540 align:start position:0% would get a hundred times a hundred 00:10:20.540 --> 00:10:25.790 align:start position:0% would get a hundred times a hundred equals<00:10:21.540> ten<00:10:22.290> thousand<00:10:23.480> then<00:10:24.480> minus<00:10:24.930> one<00:10:25.170> to 00:10:25.790 --> 00:10:25.800 align:start position:0% equals ten thousand then minus one to 00:10:25.800 --> 00:10:32.300 align:start position:0% equals ten thousand then minus one to give<00:10:25.980> us<00:10:28.370> 9999<00:10:30.200> then<00:10:31.200> we<00:10:31.380> would<00:10:31.589> divide<00:10:32.040> that 00:10:32.300 --> 00:10:32.310 align:start position:0% give us 9999 then we would divide that 00:10:32.310 --> 00:10:35.360 align:start position:0% give us 9999 then we would divide that by<00:10:32.580> two<00:10:32.640> to<00:10:33.330> give<00:10:33.510> us<00:10:33.680> four<00:10:34.680> thousand<00:10:35.220> nine 00:10:35.360 --> 00:10:35.370 align:start position:0% by two to give us four thousand nine 00:10:35.370 --> 00:10:37.600 align:start position:0% by two to give us four thousand nine hundred<00:10:35.970> and<00:10:36.180> ninety<00:10:36.630> nine<00:10:36.660> point<00:10:37.290> five 00:10:37.600 --> 00:10:37.610 align:start position:0% hundred and ninety nine point five 00:10:37.610 --> 00:10:41.150 align:start position:0% hundred and ninety nine point five exchanges<00:10:38.630> this<00:10:39.630> is<00:10:39.839> different<00:10:40.649> from<00:10:40.950> our 00:10:41.150 --> 00:10:41.160 align:start position:0% exchanges this is different from our 00:10:41.160 --> 00:10:44.769 align:start position:0% exchanges this is different from our formula<00:10:41.550> with<00:10:41.880> the<00:10:41.910> brackets<00:10:42.480> and<00:10:43.070> wrong<00:10:44.070> and 00:10:44.769 --> 00:10:44.779 align:start position:0% formula with the brackets and wrong and 00:10:44.779 --> 00:10:46.360 align:start position:0% formula with the brackets and wrong and it's<00:10:45.779> wrong 00:10:46.360 --> 00:10:46.370 align:start position:0% it's wrong 00:10:46.370 --> 00:10:49.820 align:start position:0% it's wrong because<00:10:47.370> we<00:10:47.580> left<00:10:47.820> the<00:10:47.940> brackets<00:10:48.570> out<00:10:49.290> of<00:10:49.680> the 00:10:49.820 --> 00:10:49.830 align:start position:0% because we left the brackets out of the 00:10:49.830 --> 00:10:53.180 align:start position:0% because we left the brackets out of the formula<00:10:50.160> here 00:10:53.180 --> 00:10:53.190 align:start position:0% 00:10:53.190 --> 00:10:56.580 align:start position:0% as<00:10:54.190> our<00:10:54.370> island<00:10:54.730> economy<00:10:54.970> grows<00:10:55.590> someone 00:10:56.580 --> 00:10:56.590 align:start position:0% as our island economy grows someone 00:10:56.590 --> 00:10:59.670 align:start position:0% as our island economy grows someone arrives<00:10:56.920> and<00:10:57.340> produces<00:10:58.120> nothing<00:10:58.390> he<00:10:59.290> simply 00:10:59.670 --> 00:10:59.680 align:start position:0% arrives and produces nothing he simply 00:10:59.680 --> 00:11:02.280 align:start position:0% arrives and produces nothing he simply sets<00:11:00.010> up<00:11:00.220> as<00:11:00.370> a<00:11:00.400> trader<00:11:01.140> exchanging<00:11:02.140> other 00:11:02.280 --> 00:11:02.290 align:start position:0% sets up as a trader exchanging other 00:11:02.290 --> 00:11:06.000 align:start position:0% sets up as a trader exchanging other people's<00:11:02.680> Goods<00:11:03.420> is<00:11:04.420> he<00:11:04.780> a<00:11:04.810> useless<00:11:05.230> parasite 00:11:06.000 --> 00:11:06.010 align:start position:0% people's Goods is he a useless parasite 00:11:06.010 --> 00:11:08.970 align:start position:0% people's Goods is he a useless parasite because<00:11:06.280> he<00:11:06.520> doesn't<00:11:06.730> produce<00:11:07.030> anything<00:11:07.980> he's 00:11:08.970 --> 00:11:08.980 align:start position:0% because he doesn't produce anything he's 00:11:08.980 --> 00:11:11.250 align:start position:0% because he doesn't produce anything he's actually<00:11:09.190> very<00:11:09.610> productive<00:11:10.360> and<00:11:10.810> you 00:11:11.250 --> 00:11:11.260 align:start position:0% actually very productive and you 00:11:11.260 --> 00:11:13.770 align:start position:0% actually very productive and you understand<00:11:11.860> that<00:11:12.070> if<00:11:12.460> you<00:11:13.030> understand<00:11:13.630> the 00:11:13.770 --> 00:11:13.780 align:start position:0% understand that if you understand the 00:11:13.780 --> 00:11:17.280 align:start position:0% understand that if you understand the nature<00:11:13.960> of<00:11:14.130> transactions<00:11:15.130> costs<00:11:16.140> we're<00:11:17.140> now 00:11:17.280 --> 00:11:17.290 align:start position:0% nature of transactions costs we're now 00:11:17.290 --> 00:11:19.260 align:start position:0% nature of transactions costs we're now in<00:11:17.440> a<00:11:17.530> position<00:11:17.680> to<00:11:18.100> see<00:11:18.280> just<00:11:18.670> how<00:11:18.760> productive 00:11:19.260 --> 00:11:19.270 align:start position:0% in a position to see just how productive 00:11:19.270 --> 00:11:22.530 align:start position:0% in a position to see just how productive for<00:11:19.750> the<00:11:19.840> community<00:11:20.410> the<00:11:21.160> middle<00:11:21.490> man<00:11:21.700> or<00:11:21.970> the 00:11:22.530 --> 00:11:22.540 align:start position:0% for the community the middle man or the 00:11:22.540 --> 00:11:25.860 align:start position:0% for the community the middle man or the middle<00:11:22.840> woman<00:11:23.140> can<00:11:23.710> be<00:11:24.330> let's<00:11:25.330> assume<00:11:25.660> we<00:11:25.840> have 00:11:25.860 --> 00:11:25.870 align:start position:0% middle woman can be let's assume we have 00:11:25.870 --> 00:11:28.590 align:start position:0% middle woman can be let's assume we have a<00:11:26.050> community<00:11:26.710> of<00:11:26.740> a<00:11:26.950> hundred<00:11:27.190> if<00:11:28.030> each<00:11:28.270> of<00:11:28.450> the 00:11:28.590 --> 00:11:28.600 align:start position:0% a community of a hundred if each of the 00:11:28.600 --> 00:11:31.080 align:start position:0% a community of a hundred if each of the members<00:11:28.960> of<00:11:28.990> our<00:11:29.230> society<00:11:29.890> can<00:11:30.460> go<00:11:30.640> and<00:11:30.820> trade 00:11:31.080 --> 00:11:31.090 align:start position:0% members of our society can go and trade 00:11:31.090 --> 00:11:33.390 align:start position:0% members of our society can go and trade their<00:11:31.300> produce<00:11:31.540> for<00:11:31.990> all<00:11:32.260> other<00:11:32.620> products 00:11:33.390 --> 00:11:33.400 align:start position:0% their produce for all other products 00:11:33.400 --> 00:11:36.930 align:start position:0% their produce for all other products how<00:11:34.120> many<00:11:34.330> exchanges<00:11:35.020> will<00:11:35.200> there<00:11:35.350> be<00:11:35.940> each 00:11:36.930 --> 00:11:36.940 align:start position:0% how many exchanges will there be each 00:11:36.940 --> 00:11:40.350 align:start position:0% how many exchanges will there be each one<00:11:37.330> of<00:11:37.480> the<00:11:37.570> 99<00:11:38.190> custom<00:11:39.190> ate<00:11:39.310> just<00:11:39.610> one<00:11:39.970> trade 00:11:40.350 --> 00:11:40.360 align:start position:0% one of the 99 custom ate just one trade 00:11:40.360 --> 00:11:42.960 align:start position:0% one of the 99 custom ate just one trade with<00:11:40.660> the<00:11:40.780> Trading<00:11:41.140> Post<00:11:41.190> so<00:11:42.190> there<00:11:42.310> are<00:11:42.430> 99 00:11:42.960 --> 00:11:42.970 align:start position:0% with the Trading Post so there are 99 00:11:42.970 --> 00:11:46.680 align:start position:0% with the Trading Post so there are 99 exchanges<00:11:44.130> let's<00:11:45.130> generalize<00:11:45.580> that<00:11:46.120> with<00:11:46.660> a 00:11:46.680 --> 00:11:46.690 align:start position:0% exchanges let's generalize that with a 00:11:46.690 --> 00:11:50.610 align:start position:0% exchanges let's generalize that with a second<00:11:47.230> even<00:11:47.860> simpler<00:11:48.310> formula<00:11:49.590> with<00:11:50.590> a 00:11:50.610 --> 00:11:50.620 align:start position:0% second even simpler formula with a 00:11:50.620 --> 00:11:54.510 align:start position:0% second even simpler formula with a Trading<00:11:51.070> Post<00:11:51.420> each<00:11:52.420> of<00:11:52.750> the<00:11:52.870> N<00:11:53.080> people<00:11:53.770> trades 00:11:54.510 --> 00:11:54.520 align:start position:0% Trading Post each of the N people trades 00:11:54.520 --> 00:11:58.200 align:start position:0% Trading Post each of the N people trades with<00:11:54.790> all<00:11:55.060> the<00:11:55.390> others<00:11:55.690> had<00:11:55.840> except<00:11:56.350> himself 00:11:58.200 --> 00:11:58.210 align:start position:0% with all the others had except himself 00:11:58.210 --> 00:12:02.960 align:start position:0% with all the others had except himself so<00:11:58.690> in<00:11:59.200> an<00:11:59.500> in-person<00:12:00.339> economy<00:12:01.210> there'll<00:12:01.990> be<00:12:02.020> n 00:12:02.960 --> 00:12:02.970 align:start position:0% so in an in-person economy there'll be n 00:12:02.970 --> 00:12:06.960 align:start position:0% so in an in-person economy there'll be n minus-1<00:12:04.000> exchanges<00:12:04.960> the<00:12:05.950> formula<00:12:06.430> is<00:12:06.610> simply 00:12:06.960 --> 00:12:06.970 align:start position:0% minus-1 exchanges the formula is simply 00:12:06.970 --> 00:12:11.430 align:start position:0% minus-1 exchanges the formula is simply n<00:12:07.350> minus<00:12:08.350> 1<00:12:09.210> so<00:12:10.210> if<00:12:10.360> there<00:12:10.630> are<00:12:10.779> four<00:12:11.080> people 00:12:11.430 --> 00:12:11.440 align:start position:0% n minus 1 so if there are four people 00:12:11.440 --> 00:12:14.880 align:start position:0% n minus 1 so if there are four people one<00:12:12.430> of<00:12:12.460> whom<00:12:12.580> hacks<00:12:12.970> us<00:12:13.149> a<00:12:13.180> Trading<00:12:13.630> Post<00:12:13.890> each 00:12:14.880 --> 00:12:14.890 align:start position:0% one of whom hacks us a Trading Post each 00:12:14.890 --> 00:12:16.980 align:start position:0% one of whom hacks us a Trading Post each of<00:12:15.190> the<00:12:15.279> other<00:12:15.459> three<00:12:15.850> will<00:12:16.330> exchange<00:12:16.810> with 00:12:16.980 --> 00:12:16.990 align:start position:0% of the other three will exchange with 00:12:16.990 --> 00:12:21.620 align:start position:0% of the other three will exchange with her<00:12:18.330> since<00:12:19.330> n<00:12:19.510> is<00:12:19.540> four<00:12:19.959> four<00:12:20.709> minus<00:12:21.220> one 00:12:21.620 --> 00:12:21.630 align:start position:0% her since n is four four minus one 00:12:21.630 --> 00:12:25.920 align:start position:0% her since n is four four minus one equals<00:12:22.630> three<00:12:23.970> it's<00:12:24.970> now<00:12:25.149> easy<00:12:25.360> to<00:12:25.570> see<00:12:25.779> that 00:12:25.920 --> 00:12:25.930 align:start position:0% equals three it's now easy to see that 00:12:25.930 --> 00:12:27.570 align:start position:0% equals three it's now easy to see that with<00:12:26.080> five<00:12:26.290> people<00:12:26.649> there<00:12:27.250> are<00:12:27.370> four 00:12:27.570 --> 00:12:27.580 align:start position:0% with five people there are four 00:12:27.580 --> 00:12:31.920 align:start position:0% with five people there are four exchanges<00:12:28.470> five<00:12:29.470> minus<00:12:30.250> one<00:12:30.490> equals<00:12:31.089> four<00:12:31.360> and 00:12:31.920 --> 00:12:31.930 align:start position:0% exchanges five minus one equals four and 00:12:31.930 --> 00:12:35.430 align:start position:0% exchanges five minus one equals four and with<00:12:32.500> a<00:12:32.529> hundred<00:12:33.010> people<00:12:33.600> 99<00:12:34.600> exchanges<00:12:35.290> a 00:12:35.430 --> 00:12:35.440 align:start position:0% with a hundred people 99 exchanges a 00:12:35.440 --> 00:12:41.760 align:start position:0% with a hundred people 99 exchanges a hundred<00:12:35.980> minus<00:12:36.490> one<00:12:36.700> equals<00:12:37.570> 99<00:12:37.899> and<00:12:38.670> so<00:12:39.670> on 00:12:41.760 --> 00:12:41.770 align:start position:0% hundred minus one equals 99 and so on 00:12:41.770 --> 00:12:44.160 align:start position:0% hundred minus one equals 99 and so on so<00:12:42.430> we<00:12:42.550> can<00:12:42.730> now<00:12:42.940> compare<00:12:43.510> the<00:12:43.780> number<00:12:44.140> of 00:12:44.160 --> 00:12:44.170 align:start position:0% so we can now compare the number of 00:12:44.170 --> 00:12:47.460 align:start position:0% so we can now compare the number of exchanges<00:12:44.910> with<00:12:45.910> and<00:12:46.210> without<00:12:46.750> a<00:12:46.960> trading 00:12:47.460 --> 00:12:47.470 align:start position:0% exchanges with and without a trading 00:12:47.470 --> 00:12:51.990 align:start position:0% exchanges with and without a trading post<00:12:47.680> for<00:12:48.100> a<00:12:48.760> hundred<00:12:49.210> person<00:12:49.600> economy<00:12:51.000> with 00:12:51.990 --> 00:12:52.000 align:start position:0% post for a hundred person economy with 00:12:52.000 --> 00:12:54.360 align:start position:0% post for a hundred person economy with no<00:12:52.180> trading<00:12:52.630> post<00:12:52.870> four<00:12:53.860> thousand<00:12:54.340> nine 00:12:54.360 --> 00:12:54.370 align:start position:0% no trading post four thousand nine 00:12:54.370 --> 00:12:57.900 align:start position:0% no trading post four thousand nine hundred<00:12:54.520> and<00:12:54.910> fifty<00:12:55.180> exchanges<00:12:56.880> with<00:12:57.880> a 00:12:57.900 --> 00:12:57.910 align:start position:0% hundred and fifty exchanges with a 00:12:57.910 --> 00:13:03.660 align:start position:0% hundred and fifty exchanges with a trading<00:12:58.390> post<00:12:59.220> ninety<00:13:00.220> nine<00:13:00.430> exchanges 00:13:03.660 --> 00:13:03.670 align:start position:0% 00:13:03.670 --> 00:13:07.110 align:start position:0% so<00:13:04.420> the<00:13:04.570> result<00:13:05.050> of<00:13:05.320> having<00:13:06.280> a<00:13:06.400> trading<00:13:06.910> post 00:13:07.110 --> 00:13:07.120 align:start position:0% so the result of having a trading post 00:13:07.120 --> 00:13:10.170 align:start position:0% so the result of having a trading post is<00:13:07.510> that<00:13:08.140> we<00:13:08.620> reduce<00:13:09.220> the<00:13:09.280> number<00:13:09.610> of 00:13:10.170 --> 00:13:10.180 align:start position:0% is that we reduce the number of 00:13:10.180 --> 00:13:13.620 align:start position:0% is that we reduce the number of transactions<00:13:11.080> costs<00:13:11.710> from<00:13:12.670> those<00:13:12.910> associated 00:13:13.620 --> 00:13:13.630 align:start position:0% transactions costs from those associated 00:13:13.630 --> 00:13:18.920 align:start position:0% transactions costs from those associated with<00:13:14.190> 495<00:13:15.190> owe<00:13:15.600> to<00:13:16.600> those<00:13:16.720> associated<00:13:17.140> with<00:13:17.880> 99 00:13:18.920 --> 00:13:18.930 align:start position:0% with 495 owe to those associated with 99 00:13:18.930 --> 00:13:25.800 align:start position:0% with 495 owe to those associated with 99 exchanges<00:13:19.930> a<00:13:20.460> saving<00:13:21.460> of<00:13:23.490> 4851<00:13:24.570> lots<00:13:25.570> of 00:13:25.800 --> 00:13:25.810 align:start position:0% exchanges a saving of 4851 lots of 00:13:25.810 --> 00:13:29.720 align:start position:0% exchanges a saving of 4851 lots of transactions<00:13:26.530> costs 00:13:29.720 --> 00:13:29.730 align:start position:0% 00:13:29.730 --> 00:13:34.879 align:start position:0% the<00:13:30.480> middleman<00:13:31.730> produces<00:13:32.730> a<00:13:33.290> highly<00:13:34.290> valuable 00:13:34.879 --> 00:13:34.889 align:start position:0% the middleman produces a highly valuable 00:13:34.889 --> 00:13:39.189 align:start position:0% the middleman produces a highly valuable function<00:13:35.549> in<00:13:36.329> reducing<00:13:37.049> transactions<00:13:37.769> costs 00:13:39.189 --> 00:13:39.199 align:start position:0% function in reducing transactions costs 00:13:39.199 --> 00:13:42.229 align:start position:0% function in reducing transactions costs this<00:13:40.199> transaction<00:13:40.829> cost<00:13:41.100> saving<00:13:41.579> is<00:13:41.699> why<00:13:41.910> for 00:13:42.229 --> 00:13:42.239 align:start position:0% this transaction cost saving is why for 00:13:42.239 --> 00:13:44.720 align:start position:0% this transaction cost saving is why for example<00:13:42.269> many<00:13:43.079> supermarkets<00:13:43.649> are<00:13:44.100> successful 00:13:44.720 --> 00:13:44.730 align:start position:0% example many supermarkets are successful 00:13:44.730 --> 00:13:47.449 align:start position:0% example many supermarkets are successful in<00:13:45.269> our<00:13:45.480> modern<00:13:45.689> society<00:13:45.829> people<00:13:46.829> use<00:13:47.040> money 00:13:47.449 --> 00:13:47.459 align:start position:0% in our modern society people use money 00:13:47.459 --> 00:13:49.789 align:start position:0% in our modern society people use money instead<00:13:47.939> of<00:13:47.999> barter<00:13:48.629> but<00:13:48.809> the<00:13:49.169> principle<00:13:49.739> is 00:13:49.789 --> 00:13:49.799 align:start position:0% instead of barter but the principle is 00:13:49.799 --> 00:13:52.489 align:start position:0% instead of barter but the principle is the<00:13:49.980> same<00:13:50.149> you<00:13:51.149> get<00:13:51.299> all<00:13:51.449> the<00:13:51.839> things<00:13:52.079> you<00:13:52.259> want 00:13:52.489 --> 00:13:52.499 align:start position:0% the same you get all the things you want 00:13:52.499 --> 00:13:56.509 align:start position:0% the same you get all the things you want and<00:13:52.769> pay<00:13:53.369> just<00:13:53.639> once<00:13:54.769> you<00:13:55.769> do<00:13:55.980> it<00:13:56.100> rather<00:13:56.339> than 00:13:56.509 --> 00:13:56.519 align:start position:0% and pay just once you do it rather than 00:13:56.519 --> 00:13:58.609 align:start position:0% and pay just once you do it rather than go<00:13:56.759> to<00:13:56.819> a<00:13:56.970> lot<00:13:57.209> of<00:13:57.239> different<00:13:57.480> places<00:13:57.869> because 00:13:58.609 --> 00:13:58.619 align:start position:0% go to a lot of different places because 00:13:58.619 --> 00:14:00.829 align:start position:0% go to a lot of different places because you<00:13:58.739> save<00:13:58.949> time<00:13:59.279> and<00:13:59.579> effort<00:13:59.669> in<00:14:00.299> other<00:14:00.480> words 00:14:00.829 --> 00:14:00.839 align:start position:0% you save time and effort in other words 00:14:00.839 --> 00:14:04.309 align:start position:0% you save time and effort in other words it<00:14:01.169> reduces<00:14:01.829> transactions<00:14:02.519> costs<00:14:02.970> as<00:14:03.319> the 00:14:04.309 --> 00:14:04.319 align:start position:0% it reduces transactions costs as the 00:14:04.319 --> 00:14:06.349 align:start position:0% it reduces transactions costs as the size<00:14:04.559> of<00:14:04.709> the<00:14:04.859> local<00:14:05.189> population<00:14:05.639> grows<00:14:06.059> so 00:14:06.349 --> 00:14:06.359 align:start position:0% size of the local population grows so 00:14:06.359 --> 00:14:08.929 align:start position:0% size of the local population grows so does<00:14:07.019> the<00:14:07.290> benefit<00:14:07.769> of<00:14:07.799> the<00:14:08.009> supermarket<00:14:08.549> in 00:14:08.929 --> 00:14:08.939 align:start position:0% does the benefit of the supermarket in 00:14:08.939 --> 00:14:14.329 align:start position:0% does the benefit of the supermarket in savings<00:14:09.779> on<00:14:10.019> transactions<00:14:10.739> costs<00:14:13.220> so<00:14:14.220> we 00:14:14.329 --> 00:14:14.339 align:start position:0% savings on transactions costs so we 00:14:14.339 --> 00:14:15.829 align:start position:0% savings on transactions costs so we started<00:14:14.669> off<00:14:14.759> thinking<00:14:15.179> about<00:14:15.389> whether<00:14:15.629> we 00:14:15.829 --> 00:14:15.839 align:start position:0% started off thinking about whether we 00:14:15.839 --> 00:14:18.049 align:start position:0% started off thinking about whether we could<00:14:16.049> use<00:14:16.259> formula<00:14:16.829> to<00:14:17.220> give<00:14:17.399> us<00:14:17.549> an<00:14:17.669> insight 00:14:18.049 --> 00:14:18.059 align:start position:0% could use formula to give us an insight 00:14:18.059 --> 00:14:19.879 align:start position:0% could use formula to give us an insight into<00:14:18.299> the<00:14:18.449> way<00:14:18.720> in<00:14:18.839> which<00:14:19.019> some<00:14:19.290> aspects<00:14:19.709> of 00:14:19.879 --> 00:14:19.889 align:start position:0% into the way in which some aspects of 00:14:19.889 --> 00:14:22.489 align:start position:0% into the way in which some aspects of the<00:14:19.980> economy<00:14:20.220> functioned<00:14:21.029> and<00:14:21.209> we've<00:14:21.809> seen<00:14:22.199> in 00:14:22.489 --> 00:14:22.499 align:start position:0% the economy functioned and we've seen in 00:14:22.499 --> 00:14:25.819 align:start position:0% the economy functioned and we've seen in this<00:14:23.069> case<00:14:23.369> that<00:14:23.609> you<00:14:23.790> really<00:14:24.239> can<00:14:24.449> do<00:14:24.689> that<00:14:24.899> by 00:14:25.819 --> 00:14:25.829 align:start position:0% this case that you really can do that by 00:14:25.829 --> 00:14:28.009 align:start position:0% this case that you really can do that by using<00:14:26.100> a<00:14:26.399> couple<00:14:26.699> of<00:14:26.879> very<00:14:27.480> frightening 00:14:28.009 --> 00:14:28.019 align:start position:0% using a couple of very frightening 00:14:28.019 --> 00:14:30.859 align:start position:0% using a couple of very frightening formula<00:14:28.499> we<00:14:29.040> were<00:14:29.160> able<00:14:29.369> to<00:14:29.699> see<00:14:29.970> what<00:14:30.569> is<00:14:30.720> the 00:14:30.859 --> 00:14:30.869 align:start position:0% formula we were able to see what is the 00:14:30.869 --> 00:14:33.349 align:start position:0% formula we were able to see what is the value<00:14:31.319> of<00:14:31.350> the<00:14:31.679> middleman<00:14:32.100> and<00:14:32.369> how<00:14:32.879> he's<00:14:33.149> able 00:14:33.349 --> 00:14:33.359 align:start position:0% value of the middleman and how he's able 00:14:33.359 --> 00:14:35.419 align:start position:0% value of the middleman and how he's able to<00:14:33.569> use<00:14:33.929> his<00:14:34.169> services<00:14:34.739> to<00:14:35.279> reduce 00:14:35.419 --> 00:14:35.429 align:start position:0% to use his services to reduce 00:14:35.429 --> 00:14:39.919 align:start position:0% to use his services to reduce transactions<00:14:36.269> costs<00:14:38.359> so<00:14:39.359> we've<00:14:39.509> come<00:14:39.720> to<00:14:39.749> a 00:14:39.919 --> 00:14:39.929 align:start position:0% transactions costs so we've come to a 00:14:39.929 --> 00:14:43.579 align:start position:0% transactions costs so we've come to a conclusion<00:14:40.429> by<00:14:41.429> using<00:14:41.850> these<00:14:42.179> formulae<00:14:42.749> thus 00:14:43.579 --> 00:14:43.589 align:start position:0% conclusion by using these formulae thus 00:14:43.589 --> 00:14:47.389 align:start position:0% conclusion by using these formulae thus perhaps<00:14:43.910> counterintuitive<00:14:45.949> the<00:14:46.949> next<00:14:47.220> time 00:14:47.389 --> 00:14:47.399 align:start position:0% perhaps counterintuitive the next time 00:14:47.399 --> 00:14:49.699 align:start position:0% perhaps counterintuitive the next time you<00:14:47.549> want<00:14:47.730> to<00:14:47.789> buy<00:14:48.029> a<00:14:48.059> kitchen<00:14:48.329> get<00:14:49.259> the<00:14:49.439> best 00:14:49.699 --> 00:14:49.709 align:start position:0% you want to buy a kitchen get the best 00:14:49.709 --> 00:14:52.189 align:start position:0% you want to buy a kitchen get the best value<00:14:50.129> for<00:14:50.160> money<00:14:50.489> and<00:14:51.239> that<00:14:51.569> might<00:14:51.959> mean 00:14:52.189 --> 00:14:52.199 align:start position:0% value for money and that might mean 00:14:52.199 --> 00:14:57.139 align:start position:0% value for money and that might mean going<00:14:52.559> direct<00:14:53.129> to<00:14:53.279> the<00:14:53.399> manufacturer<00:14:54.139> buddy