Y1 34) Price Controls (Minimum/Maximum Prices) and Market Failure

[@kshah4361]

The only guy I would turn my adblock off for

[@rexynator_ytb]

Is it govt or market failure

[@EternalShadow1667]

@@rexynator_ytb wrong place to post comment, but it’s government failure. Government failure is where government attempts to correct existing market failure results in a worse outcome.

[@rexynator_ytb]

@@EternalShadow1667 ok even if now my exam is finish 🤣🤣🤣

[@royaluchennalevi6224]

@@rexynator_ytb how did u do

[@rexynator_ytb]

@@royaluchennalevi6224 i got a B in a level economics not bad i think

[@Ihelp121]

Dal its time you hit us with the prediction videos, at this point you literally are my teacher!

[@sohamprasad6696]

Dal, there is an excess of demand on your videos, but a shortage of supply!! Please subsidise your knowledge

[@kspolosmith7815]

This gent is 'OUTSTANDING'. What a pleasure if you are directly taught by him.

[@oneschannel3179]

Why would you need a teacher when you have EconplusDal👊

[@0000Kickass00000]

Hey, was wondering whether you are going to post a predictions? like you did last year, great vids keep up the great work.

[@EpikOreo123]

Hey I was wondering if you could upload a video about the predictions for the Micro/Macro Papers for this year as you seemed to have predicted correctly last year. Thanks :)

[@ejporter3678]

Thanks dad

[@islamaaaa8253]

Thank you! Easily understood the topic👍

[@fotimazuhra3975]

You dont understand how usefull your vids are thank you so much!

[@Miyarupromotion]

the education system is getting more dreadful and more painful for the student

[@Miyarupromotion]

dddddddd oooh job on thejoy

[@GALA_Roma]

what does internalising mean?

[@alidan2190]

I love you EconDal so easy and understandable so I can write it in my own complex way :D

[@Adam-do8ny]

What kind of question could we get relating to this? Fixing the market failure of Alcohol as a demerit good?

[@ThePaperCreater]

Exactly, see Scotland's minimum price for alcohol (think Dal mentioned this in his hot topic video too)

[@siyasingh7597]

The reason I wanna get rich in life is to give back large sums of money to you. That's how GOATed you are man.

[@invictusgaming3622]

you are the best!!

[@bmxandscootmadd]

What would be a good evaluation for a maximum price?

[@Matthew-me6of]

An easy one to go to is the cost associated with imposing the Max. Price. There are significant costs in the form of actually trying to shift supply right to where the socially optimal level of output will be produced at the optimal price. To further this you can say that despite efforts to shift the supply right by the gov. if they lack the information needed to appropriately align the monetary cost of the negative externalities when they choose the subsidy price then the costs will not be fully internalized and as a result market failure could ensue. Usual shit about black market emergence potential (the gov. having to deal with a problem they themselves have created), costs associated with enforcing the max. price, opportunity cost of intervening here instead of elsewhere where perhaps it's more crucially needed.

[@dannypoole7565]

@@Matthew-me6of you mention how the gov will try to shift supply to cut the surplus and meet the socially optimal level of output, but why would they not just do that in the first place? where is the need for a max price if the gov are going to shift supply to make that price the market equilibrium anyway?

[@stuartmcmahon1005]

Great video, will share with pupils

[@maggiej2590]

so the market price don't change following by the set up of minimum price?

[@fiachragallagher1337]

If the min price is set below equilibrium price there's no effect because the equilibrium price is already above the minimum price so no need to change

[@alirezazadeh]

6:09 doesn't make much sense can someone explain this to me? Producers (construction firms?) would not build high rise luxury flats if there is a max price?? D:

[@EconplusDal]

The max price is only on more affordable housing not on luxury apartments

[@missimportant7330]

What happens if the price floor is set below the equilibrium

[@Fatal_Archer844]

There is no effect on anything

[@watchmewhipandnaynay]

inefficient allocation of resources

[@MC10W]

Unintended consequence of Max PTIXE FOR THE BLACKM MARKET is landlords acab air bmd the property. Therefore no difference there they’ll make more money ?

[@herb1563]

pls could someone explain why excess supply is not an issue for minimum pricing?

[@kshah4361]

Because usually firms produce more when the price is higher because they're waiting for the market mechanism to kick in and demand to rise again and for that excess supply to be bought by consumers/the govt when equilibrium is restored. But here, minimum prices are a regulation and so this is the equilibrium and so instead of producing at their own quantity, suppliers will just produce at the quantity demanded by consumers, so as to not overproduce and waste resources.

[@nozimonaisa9991]

Thanks bud

[@kakoly7697]

Loml😍😘❤

[@nickharris9761]

Excellent video

[@soyamkunwar3628]

what is Q* and P*?

[@ramanujanvenkatraman8540]

I have a question regarding the fact that black markets will be created when there is a price floor (minimum price): Will private individuals be motivated to buy a good at a higher price (in this case, alcohol) and sell it at a lower price? Whats their incentive? If they are acting on their own self interest, this is highly unlikely correct? And even if there were subsititues/alternatives, won't the government already impose a tax or a minimum price on them before-hand? Would appreciate any clarification. Thanks

[@billl5297]

They would purchase the good at a lower price (somewhere where there isn't a minimum price) and sell it at a higher, but still lower price than the price minimum to make a profit

[@ramanujanvenkatraman8540]

@@billl5297 ahh this makes soo much sense now. although posted a year ago, my finals are nearing and now its more clear haha. thanks!

[@Marakoko_otu_ampah_sagoe_jr]

What a guy

[@abdulfathah1403]

May God bless you man.

[@saraghata8676]

Perfect explanation

[@rohandhami8500]

thank you mr dal

[@jazza9559]

can you explain your point at 6:08 as to why a contraction in supply causes producers to build luxury commodities instead of cheaper commodities knowing that the price is too low?

[@richiesteavenson3633]

i think its to do with there being a maximum price on the lower priced housing as this is what is too high in the market. It doesnt matter whether theres houses that are worth 5 million being sold for 10 million if people are going to buy them. its the houses for families and young people that are too expensive which this policy will effect. therefore landlords will just choose to build nice houses where there isnt a market failure for and they cab make more money. that would be my guess :)

[@shimoshah1002]

i see it as cheaper accommodation is unable to charge rent at Price maximum, and so producers build luxury accommodation in order to be able to charge price max. This would be due to the profit motive

[@Ahmed____]

If there is limited supply of cheaper housing as a result of the maximum price, then consumers can be forced towards alternatives (substitutes), so house builders can effectively bypass the maximum price and charge the market price on luxury homes.

[@rexynator_ytb]

Is it market or govt failure

[@dannypoole7565]

both, if the costs of the gov intervention outweigh the benefits then there is both gov failure and market failure

[@rexynator_ytb]

@@dannypoole7565 thanks

[@pacolacabra5145]

You are a legend!

[@lengendboy2000]

So in a min price on alcohol essay e.g. is a min price the best way to solve the market failure... what would a strong alternative method be? in my plan i put improve education regarding the effect of alcohol

[@Matthew-me6of]

Any other way of dealing with Market Failure so regulation for instance is a good one because it's a non market based approach and it also overcomes the issue that arises from a min. price with respect to the price elasticity of demand. Because regulation works outside of the price mechanism it does not take into account the price elasticity of demand.

[@lengendboy2000]

ok thanks buddy, that helps!