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The Effects of a Per Unit Subsidy 

Jason Welker
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This video lesson illustrates and explains the effects that a per unit subsidy will have on the market for a commodity, in this case, corn. The payment to producers from government lowers the marginal cost of production, increases supply and leads to lower prices for consumers and greater revenues for producers. However, subsidies are not always economically efficient, since as we will see, the cost to taxpayers may outweigh the benefit to producers and consumers, meaning a subsidy may result in a net loss of societal welfare.
Want to learn more about economics, or just be ready for an upcoming quiz, test or end of year exam? Jason Welker is available for tutoring, IB internal assessment and extended essay support, and other services to support economics students and teachers. Learn more here! econclassroom.c...

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16 сен 2024

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Комментарии : 80   
@BollzOfSteel
@BollzOfSteel 8 лет назад
Clear and concise. Watching this video is like a crash course to understand the topic. Thanks for uploading!
@jinbotak79
@jinbotak79 11 лет назад
Simple, yet effective. Excellent ! Can't thank you enough!!
@rayamahony1610
@rayamahony1610 5 лет назад
This was really really really helpful, thank you so much
@MingLeng-l5v
@MingLeng-l5v 4 месяца назад
Oh I understand it at once!!!! You help me a lot!!! Thanks!!!
@nunvikingsofthesea
@nunvikingsofthesea 9 лет назад
Wow, jason, great video! Explained it much more clearer than my textbook. Keep up the good work.
@sk.samiulreza6205
@sk.samiulreza6205 5 лет назад
Excellent channel. Absolutely crystal clear teaching method.
@beomkomap
@beomkomap 3 года назад
Just want to say thank you for the efforts put in and your way of teaching is super crystal clear. Please contribute more videos to our students around the world and I have subsribed! Love from Singaore.
@benjaminadolph6491
@benjaminadolph6491 3 года назад
Excellent video. Really helped me grasp the effect of subsidies.
@paulomagistrado8374
@paulomagistrado8374 4 года назад
Simple and clear, thank you
@leonaphoria6169
@leonaphoria6169 11 месяцев назад
thank u for existing
@Tirthankar17
@Tirthankar17 Год назад
The intro is so 2011. Also, thanks for the video. Helped a lot
@joehan8355
@joehan8355 4 года назад
This explanation is very clear!
@DDZTDD
@DDZTDD 8 лет назад
Thanks for your explanation! Very helpful!
@tinashemisheckmukanyawu5405
@tinashemisheckmukanyawu5405 3 года назад
very helpful and easily understandable. Thank you
@alec3048
@alec3048 4 года назад
This video has a ton of helpful info, but there is an error/typo in I noticed confused me a bit for my Econ class. Consumer Surplus = Represented by top highlighted area on the triangle Producer Surplus = Represented by lower highlighted area on the triangle (Google producer surplus and check images and see for yourself) The video shows it as the other way around around the 6:00-7:00 minute mark When asked questions such as "How much producer/consumer surplus is shown in the graph?", I was getting my answers backwards until I noticed this
@tdofeldt5742
@tdofeldt5742 3 года назад
So is the producer surplus equal to $1 or $2?
@janmohammadnoor6308
@janmohammadnoor6308 11 лет назад
Thanks alot !your videos are really helpful for me
@yunus2921
@yunus2921 8 лет назад
Thank you for this video
@whosAltoon
@whosAltoon 10 лет назад
I love you man! thanks this well help me with my final exam tomorrow!
@saranz9218
@saranz9218 4 года назад
whosAltoon wow! You already graduated!!
@JasonWelker
@JasonWelker 12 лет назад
@XxxJOHNNYmartiniXxx It's called "making me nervous" by Brad Sucks
@jakobklemm8306
@jakobklemm8306 8 лет назад
Your videos are fantastic! Could you do a video on factor markets? It comes up a lot in the AP Micro exam and I don't really understand it.
@janamohamed2495
@janamohamed2495 9 месяцев назад
i am just confused in the end since the net effect on tax payers is greater so does that mean that consumer suplus doesn’t end up changing?
@sebastianodalsie7687
@sebastianodalsie7687 5 месяцев назад
but if we have a percentage subsidy (example 70% of total expenditure, so an ad valorem subsidy), how is the exercise constructed? how supply and demand curve slopes change?
@chucktetro1
@chucktetro1 9 лет назад
Hi Jason, my IB Econ students want to know where the deadweight loss goes... more exactly, how might they visualize that loss in a market? Thanks!
@ruizeli8856
@ruizeli8856 7 лет назад
I'm not quite sure about the producer surplus increased.Why it is the part above the equilibrium price?
@gustavhauri2404
@gustavhauri2404 7 лет назад
Because producers receive more than the consumers are paying ($2 from the government in this case).
@Chris-ox6xu
@Chris-ox6xu 5 лет назад
you are a legend. thank you brother
@tamdan8905
@tamdan8905 11 лет назад
my teacher's explanation is that due to the extra units produced, Marginal cost (area under MC) is bigger than Marginal Benefit (area under MB) . therefore the triangle is the welfare loss due to extra units produced. is that correct???
@danielwang4917
@danielwang4917 2 года назад
Thank you
@DTsoumpas
@DTsoumpas 4 года назад
Nailed it, great video
@luckyim6504
@luckyim6504 8 лет назад
That means the consumer surplus must be down and producer surplus must be up which is below the demand curve?
@luckyim6504
@luckyim6504 8 лет назад
I mean for the new consumer surplus and producer surplus
@pipscalibur
@pipscalibur 12 лет назад
cheers fella, very useful
@winky_face92
@winky_face92 9 лет назад
excellent video
@janegbertswagerman3315
@janegbertswagerman3315 8 лет назад
Thank you very much!
@adig3801
@adig3801 5 лет назад
does this still hold in a duopoly??
@rodashipanta
@rodashipanta 8 лет назад
Can I know about the surplus when demand curve is perfectly inelastic???I mean who enjoys the surplus producers or consumres???
@wonglaiming3760
@wonglaiming3760 7 лет назад
Rodashi Panta consumers enjoy the surplus when the demand curve is perfectly inelastic
@jimboojamm
@jimboojamm 12 лет назад
what do you use to draw your graph? I mean program wise
@luizbattistel7762
@luizbattistel7762 8 лет назад
the pink triangle is the price paid to avoid starvation in the case of imported corn not being provided during a war
@wrsamson
@wrsamson 11 лет назад
Just curious what program are you using for your analysis?
@shebamichelle5313
@shebamichelle5313 4 года назад
I don't get uo new supply curve because zero output can't be produced
@sajalahammad7381
@sajalahammad7381 6 лет назад
What types of goods indirect taxes do not have deadweight loss?
@JasonWelker
@JasonWelker 6 лет назад
Taxes on "demerit", or harmful goods, such as cigarettes and the output of polluting factories, will reduce the DWL resulting from the negative externalities these goods produce. So taxing them actually reduces DWL...
@DesecrateConformity
@DesecrateConformity 12 лет назад
A subsidy raises the demand over time, as well. The cheapening of the product incentivizes consumers to buy more.
@marincordeleanu3807
@marincordeleanu3807 6 лет назад
they do buy more. but the demand curve doesn't shift.
@josephherbert9707
@josephherbert9707 10 лет назад
What software do you use here for the graphs?
@therealhannahsaul
@therealhannahsaul 3 года назад
God bless u
@mem3ntomori
@mem3ntomori 9 лет назад
What if the subsidy had an effect on the demand curve? Would the demand curve shift to the left or right? This is a question I have for an assignment.
@tabussumsehar7746
@tabussumsehar7746 7 лет назад
elkhourya It shifts to the right because giving subsidy ultimately increases Qd. Pc comes down, Ps goes up and there is a gap between both previous surpluses that is the benefit or increment in Consumer and producer surplus.
@esbencito
@esbencito 12 лет назад
what's the song at the beginning called ?
@niharikanangia3908
@niharikanangia3908 11 лет назад
Very good
@shivani123cool
@shivani123cool 6 лет назад
thankyou so much
@chrisgregory8073
@chrisgregory8073 4 года назад
Around 4:35 you say it results in an increase in demand due to the increase in supply. Did you mean to say that differently? Increases in supply to cause increases in demand. Demand is higher at lower prices though. Am I missing something? I was hoping you were going to get into the math in this video of figuring out the actual real numbers not just the shifts.
@marcusantonius9680
@marcusantonius9680 5 лет назад
You didn't show how to calculate the producer and consumer price
@JasonWelker
@JasonWelker 12 лет назад
If you actually watch the video, it will show you how to solve your problem!
@jansasha2628
@jansasha2628 8 лет назад
i did not understand!!!!!
@andrewjason3756
@andrewjason3756 6 лет назад
I don't understand the dead weight loss part, can someone please explain???
@JasonWelker
@JasonWelker 6 лет назад
Sure. A subsidy costs taxpayers money. It creates benefits for buyers and sellers of the specific product being subsidized. There is a DWL because the cost exceeds the benefit. Whenever there is a DWL in a market, it means the cost of something exceeds the benefit. Here taxpayers lose more than producers and consumers win, thus there is welfare loss.
@andrewjason3756
@andrewjason3756 6 лет назад
Thanks. I understood now
@stefano5853
@stefano5853 8 лет назад
I don´t understand why the gained producer surplus is that shape above the new consumer surplus!
@gridcaster
@gridcaster 6 лет назад
Because you're modeling the price received by the producer, which is higher than the price actually paid by the consumer. How can the producer get more money than the consumer actually paid for the good???? Well that's the whole point, it's being paid by a government subsidy ( i.e. Taxes from people). Just like with excise tax incidence the total benefits of the subsidy are not entirely passed on to the producer. There is an incidence ( division) between the producer and consumer controlled by the elasticity of the demand function for the good. This is the difference between the market price of the good before and after subsidy is not equal to the total subsidy. That decrease in market price is the portion of the subsidy passed on to the consumer; the remainder is the portion passed on to the producer.
@CT-mc3sy
@CT-mc3sy 6 лет назад
Remember that the Producer surplus is simply the area above the supply curve and below the price. Producers get to sell at a higher price than equilibrium because of the quantity demanded, hence the increase in the original surplus you get at the original price!
@joshvmcconnell
@joshvmcconnell 11 лет назад
good stuff
@NazifaTasneemchesirecat
@NazifaTasneemchesirecat 6 лет назад
I think I got the point. yeah thanks mate
@kevinklose
@kevinklose 10 лет назад
Oppurtinity cost: education - oh, the irony!
@leonardmilea7079
@leonardmilea7079 8 лет назад
was thinking the same thing
@janbochen5204
@janbochen5204 11 лет назад
gooooood....
@tdofeldt5742
@tdofeldt5742 2 года назад
6:47
@esbencito
@esbencito 12 лет назад
@welkerjason Thanks a lot mate ! great video btw..!
@jeffreycanfield1939
@jeffreycanfield1939 4 года назад
One step at a time don't be living on the line I don't need a friend i got morbid on the mind Sunshine in my brain making everyone complain Radio in the heart don't be being so strange I think i'm losing it baby where you been Everybody says that you're moving again I don't wanna be right baby every single night I could tell you a thing about taking your time It's making me nervous yeah One step at a time don't be living on the line I don't need a friend i got morbid on the mind Sunshine in my brain making everyone complain Radio in the heart don't be being so strange I think i'm losing it baby where you been Everybody says that you're moving again I don't wanna be right baby every single night I could tell you a thing about taking your time It's making me nervous yeah lalalala... I think i'm losing it baby where you been Everybody says that you're moving again I don't wanna be right baby every single night I could tell you a thing about taking your time It's making me nervous yeah
@wrsamson
@wrsamson 11 лет назад
Your comment is partially inaccurate, and it is a really important difference! A producer-side subsidy (which is what the video is demonstrating) increases the QUANTITY demanded, because of the lower price that consumers are seeing. It does NOT cause the entire demand curve to shift to the right, which is what you are describing.
@Manaskaaram
@Manaskaaram 12 лет назад
still wondering why this has so few views...
@adada9012
@adada9012 6 лет назад
Hey Mr Welker, Some noobs in my class are being annoying and trying to flag your videos in order to have them removed. This is such childish behavior. Could you please send me a link of your videos in order to have them somewhere safe. Keep on making us smile you King. =D Best Regards, Omar Adada
@anythingoes129
@anythingoes129 9 лет назад
Wassup Awty??
@gwendaoseikissi
@gwendaoseikissi 7 лет назад
Why in the world should I be learning this in 9th Grade!!?😂
@lieutenant7196
@lieutenant7196 7 лет назад
Pp lol alright i gotta get back to studying
@courage936
@courage936 4 года назад
he said Pp. hehhehe
@balance-hb6rs
@balance-hb6rs 5 месяцев назад
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