Indirect Tax to Solve Negative Externality in Consumption (De-Merit Good) Market Failure

Indirect Tax to Solve Negative Externality in Consumption (De-Merit Good) Market Failure - How to draw the Indirect Tax to Solve Negative Externality in Consumption Market Failure diagram
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Theory video: • Y1/IB 19) Indirect Tax...

[@jacksimms77]

doing what the text book couldnt

[@Janu5142]

I was working on my eco IA and got completely confused about the social optimum, but this clarified it, thank you so much!

[@ethanharvey5934]

I would like to meet the four people that disliked this video

[@gabrielvillar7471]

The supply after tax should never move the quantity to the optimum, it should be between the Q opt and Q1 because there is still welfare loss after the tax. Just label the new quantity Qtax in the middle of Q1 and Qopt. Also include the new price consumers pay and price producers receive.

[@hitesh6002]

can i confirm that this is correct? because i thought the same too

[@zilewang6150]

I love your videos!!! Helped me with my assignments so much!!!

[@thibautnyssens7359]

What happens to welfare after the tax? Does the tax revenue for the government take out all the deadweight loss?

[@gregtheflyingwhale]

no one knows :) the deadweight triangle is a mystery

[@Sebz]

In theory, if the tax is equal to the external cost, the dwl should be eliminated

[@cyber_tuktuk8042]

thanks bbg

[@drenmatoshi929]

Hi Sir,
In your Analysis and Evaluation booklet 2017, you label the new production curve as MSC+tax (page 40), however in this video, you label it MPC=MSC+tax. So which one should I use to label the curve in the exam? Great video as usual.
Thanks

[@Zombiekiller1z0]

u shud use the buber one

[@bigmansanister8716]

there isnt much difference but the MPC=PSC+Tax is probably safer.

[@MC10W]

qhy ar3 we at the social optimumquantity bit not at the social optimumm price?

[@ethanharvey5934]

thank you sir

[@aanyabhalla1219]

why are there two msc curves though

[@georgewf2328]

To illustrate the tax which restricts quantity to the social optimum where MSB = MSC.

[@MCart1215]

Answer?