zakg
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hi, i'm doing good with my revision for exam on Monday, however the one thing I can't get my head around is the WELFARE GAIN/COST. I really don't understand what they are other than welfare gain = subsidy, welfare cost = tax. could you please explain it to me, especially how the triangle on the diagram works. Please help! thanks
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jLou711
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Is there any diagrams to show the welfare gain

also, can anyone verify that welfare gain is on the left and welfare loss is on the right side of the diagrams?

and is that positive externalities = msc=mpc and negative mpb=msb?
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zakg
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(Original post by jLou711)
Is there any diagrams to show the welfare gain

also, can anyone verify that welfare gain is on the left and welfare loss is on the right side of the diagrams?

and is that positive externalities = msc=mpc and negative mpb=msb?
you can rearrange the formulae, but here they are to equal msc/b: MSB/C = MPB/C+MEB/C
Last edited by RK; 1 year ago
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