The price paid by consumers is at the new intersection actually shifting the supply curve the vertical distance of the tax or subsidy. The price sellers get after the tax or subsidy is at the old supply curve below (for a tax) or above(for a subsidy) the new supply curve. Good luck on your exams!
Sir, At 3:40, did you mean to say for the people who don't PRODUCE (As opposed to buy) the product, as we are talking about negative production externalities here? The two supply curves are meant to depict: (i) The suppliers who produce the product and as a result of this process, create negative production externalities for others, represented by S1=MPC, and (ii) The suppliers who are affected by said negative production externalities and as a result, suffer higher costs, represented by the higher supply curve, S2=MSC. Am I correct or is there a mistake? Thanking you in advance
You are correct. I should have said "buy or produce." My point is this is a cost that falls on people outside the transaction (those who aren't buyers or sellers).
Thank You for the fast reply sir. I also realize now that I was mistaken in assuming that there were two supply curves, when really the MSC curve is just something that factors in the external cost, along with the cost of production, and depicts it graphically.
hi! do you have any tips for solving the mcq? I understand and remember most of the concepts but when I solve the mcq mock test ( for AP in 2 weeks) I get a lot of questions wrong...
I think the MCQ is often all about practice. There are practice 15 questions MC games on ReviewEcon.com for each unit and a 30 question MC game for the whole class. They are all AP style questions with explanations. You can also see if your teacher will give you some practice questions. Just work to understand why the correct answer is correct or why you were incorrect when you get them wrong. The MC games on ReviewEcon all have explanations that can help. Good luck!
Hi, your video was helpful! How can I properly shade the DWL? I keep connecting the wrong 3 points and keep shading the triangle in the wrong spot? What happens if industries and consumers ignore external costs? What happens to price and quantity? Also, on the AP exam, are 6.2 questions usually mcqs or frqs?
First of all the triangle always points to the allocatively (socially optimal) quantity. The triangle is formed with one point at the MSB for the market quantity, one point bat the MSC for the market quantity, then the MSB=MSC point. Those three points are the DWL at the market quantity. I hope that helps!
Also, if everyone ignores the externalities, we get the market quantity (where MPC=MPB or S=D). You can get both MC and FRQ questions about 6.2. I expect both on this year's exam. But we can't know for sure!
Yeah, they've had to graph them in past FRQs. So far they haven't required the distinction between consumption and production externalities on any released questions, but the CED and AP lessons indicate they may start.
Thanks for the video! I had a quick question tho. In 9:23, what does it mean by "consumer tax is also possible"? Isn't a per-unit tax already like a consumer tax?
If the tax is on producers, it will decrease the supply (the vertical distance of the tax). If the tax is directly on consumers, it will decrease the demand (the vertical distance of the tax). Either way, you get a lower quantity. And if the per unit tax is equal to the marginal external cost, the new equilibrium quantity will be the socially optimal quantity.
i have my test in 2 hours and im binging your videos, thank you so much for carrying me this year
Good luck!
Perfect for my home assignment :) Thank you so much
You're welcome!
What a great review! Gained a new subscriber:)
Awesome! Thank you! 😄
how to find the price paid by sellers or consumers after adding taxes or subsidies?
The price paid by consumers is at the new intersection actually shifting the supply curve the vertical distance of the tax or subsidy. The price sellers get after the tax or subsidy is at the old supply curve below (for a tax) or above(for a subsidy) the new supply curve.
Good luck on your exams!
At 10:12, the graph says S = MSC = MPB. I was just a little confused because I assumed that D + MPB.
Good catch! That is a typo and it's on my list of things to fix. It should be S=MSC=MPC.
Hopefully it didn't throw you off too much! 😅
@@ReviewEcon No problem! Thanks for the clarification.
Sir,
At 3:40, did you mean to say for the people who don't PRODUCE (As opposed to buy) the product, as we are talking about negative production externalities here? The two supply curves are meant to depict:
(i) The suppliers who produce the product and as a result of this process, create negative production externalities for others, represented by S1=MPC, and
(ii) The suppliers who are affected by said negative production externalities and as a result, suffer higher costs, represented by the higher supply curve, S2=MSC.
Am I correct or is there a mistake?
Thanking you in advance
You are correct. I should have said "buy or produce." My point is this is a cost that falls on people outside the transaction (those who aren't buyers or sellers).
Thank You for the fast reply sir. I also realize now that I was mistaken in assuming that there were two supply curves, when really the MSC curve is just something that factors in the external cost, along with the cost of production, and depicts it graphically.
hi! do you have any tips for solving the mcq?
I understand and remember most of the concepts but when I solve the mcq mock test ( for AP in 2 weeks) I get a lot of questions wrong...
I think the MCQ is often all about practice. There are practice 15 questions MC games on ReviewEcon.com for each unit and a 30 question MC game for the whole class. They are all AP style questions with explanations. You can also see if your teacher will give you some practice questions.
Just work to understand why the correct answer is correct or why you were incorrect when you get them wrong. The MC games on ReviewEcon all have explanations that can help.
Good luck!
Also, remember a little over 50% is generally a low 3 on the exam. So missing some questions is ok!
@@ReviewEcon thank you so much i love u man
Aw! Thank you!
Good luck on your exams! 🤘😎
❤️
Perfect timing
Awesome!
Hi, your video was helpful!
How can I properly shade the DWL? I keep connecting the wrong 3 points and keep shading the triangle in the wrong spot? What happens if industries and consumers ignore external costs? What happens to price and quantity? Also, on the AP exam, are 6.2 questions usually mcqs or frqs?
First of all the triangle always points to the allocatively (socially optimal) quantity.
The triangle is formed with one point at the MSB for the market quantity, one point bat the MSC for the market quantity, then the MSB=MSC point. Those three points are the DWL at the market quantity.
I hope that helps!
Also, if everyone ignores the externalities, we get the market quantity (where MPC=MPB or S=D).
You can get both MC and FRQ questions about 6.2. I expect both on this year's exam. But we can't know for sure!
Thank you @@ReviewEcon
I have not taught micro in over a decade. I still teach externalities a bit. I don't remember graphing them. Is that a thing on the AP exam?
Yeah, they've had to graph them in past FRQs.
So far they haven't required the distinction between consumption and production externalities on any released questions, but the CED and AP lessons indicate they may start.
Thanks for the video! I had a quick question tho. In 9:23, what does it mean by "consumer tax is also possible"? Isn't a per-unit tax already like a consumer tax?
If the tax is on producers, it will decrease the supply (the vertical distance of the tax). If the tax is directly on consumers, it will decrease the demand (the vertical distance of the tax). Either way, you get a lower quantity. And if the per unit tax is equal to the marginal external cost, the new equilibrium quantity will be the socially optimal quantity.
my teacher plays ur videos in class every day ool
Awesome! Good luck with your exams!
goated video
Thank you!
Jacob clifford vs jacob reed
No competition at all. Complements not substitutes.
Use what works for you. No such thing as too many resources to help you ace those AP exams! 😀
@@ReviewEcon lol appreciate both of you👍 im taking both econs so Ill take all the help I can get