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This lecture covers the concepts of control volume and system, focusing on the collection of matter with fixed identity, controlled mass, and Lagrangian motion with the flow. It explains the difference between control volume and system, emphasizing the boundary control surface. The lecture also discusses physical laws related to mass conservation and Reynolds transport theorem, providing a formal derivation. The content progresses from defining the system to exploring the extensive and intensive properties of matter, with examples of fluid elements and boundary control. The instructor illustrates the application of these concepts through various equations and theoretical explanations.