7.4 Marginal Social Benefit and Marginal Social Cost AP Micro

The socially optimal point of consumption/production is the point where MSB=MSC. On the board it incorrectly says MSB=MPB.

[@ozansaglk6485]

very well explained. But there is a small mistake on the equation at 5:58 --> it supposed to be MSB=MSC

[@Noobi1Cannonobi]

Needed this for assignment, many thanks.

[@Luckyme8556]

Very explicit explanation.
Thanks

[@CareyLaManna]

No problem!

[@juliendet8285]

you saved me for my test🙏

[@thecyborge1578]

Thanks a lot. Wish me luck on my third midterm tomorrow

[@okkarnaywin6380]

Thanks. very clear explanation.

[@arnegraphics3380]

Man AP gov AND micro, man is carrying these AP tests

[@aidanlynch8729]

Thank you, very helpful :)

[@halayahia8744]

Thank you so much!!

[@TheMdsafwan07]

Thank u. Very well explained

[@larsballer2385]

great stuff thanks

[@yourn3misis309]

So the marginal benefits are based on the demand curve and the marginal costs are based on the supply curve amirite ?

[@CareyLaManna]

Yup

[@danaelona4081]

Hello,my question is more like supply and demand both shift to thw left. So the price stays the same ultimately.
The question asks what point is the social optimum at, in this situation?
Would this mean that there is no social optimum bc the price stays the same?? Need help...

[@CareyLaManna]

It's hard to answer that w/o seeing the question. Depending on whether there are positive or negative externalities the socially optimal quantity may be greater or less than the market equilibrium.

[@danaelona4081]

@@CareyLaManna it says having drunk driverss on the road is a negative externality, that both consumers and producers must internalize.

[@danaelona4081]

@@CareyLaManna it also says: think about the contrast between the natural market equilibrium and the social optimum

[@danaelona4081]

I have 3 graph questions. I could send a picture of them through email if that would help. I have tried them all but gotten them wrong. [e-mail]

[@CareyLaManna]

I'm not sure if this is what it's going for, but...the market equilibrium quantity of drunk driving > socially optimal quantity. This means that in equilibrium the price buyers are paying for drunk driving is too low and the price sellers are receiving is too high. The socially optimal quantity is a point to the left of market equilibrium at which there will be a wedge between supply and demand. Find the point where the SOQ intersects with the demand curve--this is the price buyers now pay (higher than before), then find the point where the SOQ intersects with the supply curve--this is the price sellers now receive (lower than before). These price changes reflect that both buyers and sellers are internalizing the external costs of drunk driving.

[@mines3275]

thank you!!!