Subsidies

What is a subsidy? A subsidy is really just a negative or reverse tax. Instead of collecting money in the form of a tax, the government gives money to consumer or producers. In this video, we look at the subsidy wedge and who benefits the most from different subsidies.

00:00 Intro
00:34 What is a Subsidy?
01:31 The Subsidy "Wedge"
06:01 No Elasticity = No Entry
09:43 Example: California Cotton Farmers & Water Subsidies

[KhaiNguyen-sjtx]

Your videos are always great and be made professionally!!! Thanks for all your hard work!

[oluwaseunadeoyeoyebamiji]

Thank you for the wonderful video. I have a question, for the Agricultural commodity market (Very close to perfect competition), Farmers have no where else to go. DOes 7:37 of the video imply that subsidy to the agricultural sector will result in no Dead Weight Loss?

[liaqatalihassanzadah]

Absolutely useful and very understandable. Thanks a lot.

[Ciaralove-vf]

Have exam tomorrow and this helped me a lot 🙏🏾🙏🏾🙏🏾

[jan-owennugent]

That's pretty kewl. I learned something new today.

[gwho]

11:11
the subsidy is for water.
but the elasticity is for cotton.

shouldn't the comparison be for the elasticity of water to make a fair comparison?

But additionally, what actually are the dynamics and effects of a subsidy on an input good (capital good) depending on the elasticity of the produced good?

[lambdacore]

How do we analyze total consumer surplus and total producer surplus after subsidy? Would there be overlapping areas in the diagram for each surplus?

[sebastianodalsie]

I have a question. if the subsidy were for both (producer and consumer) and the government subsidy were in percentages (example 70%). how should the exercise be set up?

[MichaelSzemethy]

Do you have a link for the lobbyist and politicians pushing these subsidies?

[dandiaran]

Thank you for this! Just one question: what software do you use to draw the graphs? I've been drawing on Paint and it's killing me...

[luisblackaller]

in a perfect market with a subsidy is consumer and producer surplus equal?

[AllAboutJailbreak]

is there excess demand and a deadweight loss with a subsidy?

[gurujibriyani]

Sir i have a question, will minimum price schemes on farm produce beneficial for farmers or farm subsidies on farm produce ?

[chrisjamel]

depending on how free market the public sector is....that is to say politically free, negates the deadweight loss. If i spend my vote/political energy or currency on politicians who support subsidies then where is the in efficiency...in fact politically calculated subsidies are imop strategically calculated price adjustments that correlate to public sector market values. These political values may be hard to represent initially.

[chrisjamel]

But then again not all public sector values are productive. Assuming humans will act in mostly rational ways, overtime subsidies will correct for public sector failures. for instance tax write offs such as for charity...in fact charity is far more efficient than taxes imop. but lets say a tobacco subsidy which might cost society externalities and be counterproductive...is still technically productive. in its isolation it weakens the economic power of those reliant upon it. So in conclusion some subsidies strengthen while others weaken.

[abugosok]

as a customer, I need to pay even more since legal poor statement in form of gov certificate is not on my pocket.

[raysommers]

I can sum up this video as "government subsidies are always bad for the people and the economy".

[costarica]

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[AllAboutJailbreak]

is there excess demand and a deadweight loss with a subsidy?