1000 times thank you to Alex and Taylor. It’s because of them I love economics and get interested in it. I also love their textbook. It’s the best outside.
Huh. But if the new social equilibrium creates a much higher price, doesn't that mean that more people will be priced out of the market (i.e., the people to the right of the new equilibrium point)? What if someone desperately needs the antibiotic, but cannot afford it? Or is that something you guys address in another video? Also, do simple supply and demand graphs really capture the market for antibiotics? I feel like health care goods tend to have more complex structures that might not meet the requirements for perfectly competitive markets.
Sure, this is econ 101, so all market curves are straight. I think the issue you raise -- about the cost being too high for some people to afford the product -- is not specific to antibiotics. Some people desperately need to pay rent but can't afford it even without any significant externalities shifting the market equilibrium. If someone is in dire need of a pill or antibiotics, that's what insurance/subsidies/welfare programs are for.
In the longterm, why should a company consider maximizing social surplus over choosing more sales and therefore higher profit margins? Or would the increased price be sufficient to cover the profit margins while also benefiting externalities?
A Pigouvian tax that captured the cost of the externality would minimize deadweight loss. Same applies to a carbon tax to capture the externalities of fossil fuel use.
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Please update Mastering Metrics... amazing set of video
I love these videos. It's been so long since you've made them. Please keep making them!
1000 times thank you to Alex and Taylor. It’s because of them I love economics and get interested in it. I also love their textbook. It’s the best outside.
I love your work, I'm glad new videos are coming! It's been a while.
Welcome back!
This videos are the best
BRILLIANCY !!
Huh. But if the new social equilibrium creates a much higher price, doesn't that mean that more people will be priced out of the market (i.e., the people to the right of the new equilibrium point)? What if someone desperately needs the antibiotic, but cannot afford it? Or is that something you guys address in another video? Also, do simple supply and demand graphs really capture the market for antibiotics? I feel like health care goods tend to have more complex structures that might not meet the requirements for perfectly competitive markets.
Sure, this is econ 101, so all market curves are straight. I think the issue you raise -- about the cost being too high for some people to afford the product -- is not specific to antibiotics. Some people desperately need to pay rent but can't afford it even without any significant externalities shifting the market equilibrium. If someone is in dire need of a pill or antibiotics, that's what insurance/subsidies/welfare programs are for.
In the longterm, why should a company consider maximizing social surplus over choosing more sales and therefore higher profit margins? Or would the increased price be sufficient to cover the profit margins while also benefiting externalities?
A Pigouvian tax that captured the cost of the externality would minimize deadweight loss. Same applies to a carbon tax to capture the externalities of fossil fuel use.
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