[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:00.43,0:00:02.94,Default,,0000,0000,0000,,Let's think about who bears the burden
Dialogue: 0,0:00:02.94,0:00:04.77,Default,,0000,0000,0000,,of a tax in different situations.
Dialogue: 0,0:00:04.77,0:00:06.68,Default,,0000,0000,0000,,In this video, we're\Ngoing to focus on insulin.
Dialogue: 0,0:00:06.68,0:00:08.13,Default,,0000,0000,0000,,Insulin is interesting.
Dialogue: 0,0:00:08.13,0:00:10.74,Default,,0000,0000,0000,,It's what's needed by Diabetes
Dialogue: 0,0:00:10.74,0:00:12.18,Default,,0000,0000,0000,,in order to maintain\Ntheir blood sugar level
Dialogue: 0,0:00:12.18,0:00:14.35,Default,,0000,0000,0000,,so for them, you can almost imagine
Dialogue: 0,0:00:14.35,0:00:16.15,Default,,0000,0000,0000,,they need this just to survive.
Dialogue: 0,0:00:16.15,0:00:18.61,Default,,0000,0000,0000,,It almost has an infinite\Nmarginal benefit for them.
Dialogue: 0,0:00:18.61,0:00:21.07,Default,,0000,0000,0000,,So they're willing, no\Nmatter what the price,
Dialogue: 0,0:00:21.07,0:00:22.54,Default,,0000,0000,0000,,they're essentially willing to take the
Dialogue: 0,0:00:22.54,0:00:24.07,Default,,0000,0000,0000,,insulin that they need to take.
Dialogue: 0,0:00:24.07,0:00:26.60,Default,,0000,0000,0000,,So, for example, even if\Nthe price of insulin were
Dialogue: 0,0:00:26.60,0:00:29.61,Default,,0000,0000,0000,,a dollar, if the doctors in\Nthis town say collectively
Dialogue: 0,0:00:29.61,0:00:31.80,Default,,0000,0000,0000,,all the diabetics need 3,000 vials a year,
Dialogue: 0,0:00:31.80,0:00:33.93,Default,,0000,0000,0000,,they will take 3,000 vials a year.
Dialogue: 0,0:00:33.93,0:00:35.59,Default,,0000,0000,0000,,If the price is $80 a vial,
Dialogue: 0,0:00:35.59,0:00:37.35,Default,,0000,0000,0000,,they'll still take 3,000 vials a year.
Dialogue: 0,0:00:37.35,0:00:38.94,Default,,0000,0000,0000,,So within reason, within a reasonable
Dialogue: 0,0:00:38.94,0:00:41.01,Default,,0000,0000,0000,,price range, you have no change
Dialogue: 0,0:00:41.01,0:00:42.54,Default,,0000,0000,0000,,in quantity demanded.
Dialogue: 0,0:00:42.54,0:00:43.80,Default,,0000,0000,0000,,So, in this case,
Dialogue: 0,0:00:43.80,0:00:46.31,Default,,0000,0000,0000,,at least in a reasonable price range,
Dialogue: 0,0:00:46.31,0:00:51.19,Default,,0000,0000,0000,,the demand curve for insulin is vertical.
Dialogue: 0,0:00:51.19,0:00:52.99,Default,,0000,0000,0000,,Obviously, if we went up to prices like
Dialogue: 0,0:00:52.99,0:00:56.46,Default,,0000,0000,0000,,$9 million per vial, then all of a sudden,
Dialogue: 0,0:00:56.46,0:00:58.73,Default,,0000,0000,0000,,some of the diabetics just won't be able
Dialogue: 0,0:00:58.73,0:00:59.92,Default,,0000,0000,0000,,to afford it, and all of a sudden,
Dialogue: 0,0:00:59.92,0:01:01.53,Default,,0000,0000,0000,,the curve wouldn't be able\Nto be vertical anymore.
Dialogue: 0,0:01:01.53,0:01:03.39,Default,,0000,0000,0000,,But at least in a reasonable price range,
Dialogue: 0,0:01:03.39,0:01:05.26,Default,,0000,0000,0000,,you have a vertical curve.
Dialogue: 0,0:01:05.26,0:01:07.77,Default,,0000,0000,0000,,So this right over here\Nis our demand curve.
Dialogue: 0,0:01:07.77,0:01:09.92,Default,,0000,0000,0000,,That is our demand curve.
Dialogue: 0,0:01:09.92,0:01:11.12,Default,,0000,0000,0000,,You might remember when
Dialogue: 0,0:01:11.12,0:01:12.32,Default,,0000,0000,0000,,we talked about elasticity,
Dialogue: 0,0:01:12.32,0:01:15.06,Default,,0000,0000,0000,,this is perfectly inelastic demand.
Dialogue: 0,0:01:15.06,0:01:19.92,Default,,0000,0000,0000,,It's perfectly inelastic\N... perfectly inelastic.
Dialogue: 0,0:01:20.96,0:01:21.86,Default,,0000,0000,0000,,The way you can think about it,
Dialogue: 0,0:01:21.86,0:01:22.98,Default,,0000,0000,0000,,I kind of think of a brick
Dialogue: 0,0:01:22.98,0:01:24.26,Default,,0000,0000,0000,,as perfectly inelastic.
Dialogue: 0,0:01:24.26,0:01:25.86,Default,,0000,0000,0000,,No matter how much you\Npush or pull on the brick
Dialogue: 0,0:01:25.86,0:01:28.93,Default,,0000,0000,0000,,within reason, at least\Nwith my level of strength,
Dialogue: 0,0:01:28.93,0:01:31.73,Default,,0000,0000,0000,,you're not going to be\Nable to deform the brick.
Dialogue: 0,0:01:31.74,0:01:33.34,Default,,0000,0000,0000,,That's the opposite of a rubber band,
Dialogue: 0,0:01:33.34,0:01:35.28,Default,,0000,0000,0000,,which is very elastic, or you can
Dialogue: 0,0:01:35.28,0:01:37.28,Default,,0000,0000,0000,,think about the definition of elasticity,
Dialogue: 0,0:01:37.28,0:01:38.44,Default,,0000,0000,0000,,the one that we've been using,
Dialogue: 0,0:01:38.44,0:01:41.75,Default,,0000,0000,0000,,elasticity is equal to percent,
Dialogue: 0,0:01:41.75,0:01:48.03,Default,,0000,0000,0000,,change in quantity over\Npercent, change in price.
Dialogue: 0,0:01:48.03,0:01:49.14,Default,,0000,0000,0000,,Over here, no matter how much we
Dialogue: 0,0:01:49.14,0:01:50.94,Default,,0000,0000,0000,,change price within reason,
Dialogue: 0,0:01:50.94,0:01:53.40,Default,,0000,0000,0000,,at least in this range of\Nprice along this curve,
Dialogue: 0,0:01:53.40,0:01:55.38,Default,,0000,0000,0000,,people are still going to demand
Dialogue: 0,0:01:55.38,0:02:00.21,Default,,0000,0000,0000,,a quantity of 3,000 vials per year.
Dialogue: 0,0:02:00.21,0:02:04.38,Default,,0000,0000,0000,,Let's just draw a supply curve here,
Dialogue: 0,0:02:04.38,0:02:05.80,Default,,0000,0000,0000,,so let's do a supply curve,
Dialogue: 0,0:02:05.80,0:02:07.62,Default,,0000,0000,0000,,looks something like that,
Dialogue: 0,0:02:07.62,0:02:11.66,Default,,0000,0000,0000,,So if you have ... this is supply,
Dialogue: 0,0:02:11.66,0:02:13.88,Default,,0000,0000,0000,,so if you have no taxes,
Dialogue: 0,0:02:13.88,0:02:16.30,Default,,0000,0000,0000,,no regulation of this market,
Dialogue: 0,0:02:16.30,0:02:18.30,Default,,0000,0000,0000,,based on the way I've\Ndrawn it right over here,
Dialogue: 0,0:02:18.30,0:02:19.63,Default,,0000,0000,0000,,the equilibrium price lands us
Dialogue: 0,0:02:19.63,0:02:21.81,Default,,0000,0000,0000,,right around $75.
Dialogue: 0,0:02:21.81,0:02:23.34,Default,,0000,0000,0000,,I did a little research before this video,
Dialogue: 0,0:02:23.34,0:02:24.12,Default,,0000,0000,0000,,it actually turns out that is
Dialogue: 0,0:02:24.12,0:02:26.89,Default,,0000,0000,0000,,about the market price\Nfor a vial of insulin.
Dialogue: 0,0:02:26.89,0:02:29.23,Default,,0000,0000,0000,,The equilibrium quantity, because that is
Dialogue: 0,0:02:29.23,0:02:30.56,Default,,0000,0000,0000,,the exact quantity that people need
Dialogue: 0,0:02:30.56,0:02:32.06,Default,,0000,0000,0000,,is 3,000 vials.
Dialogue: 0,0:02:32.06,0:02:34.48,Default,,0000,0000,0000,,A slightly interesting\Nthing to think about
Dialogue: 0,0:02:34.48,0:02:36.40,Default,,0000,0000,0000,,in this situation where you have perfectly
Dialogue: 0,0:02:36.40,0:02:39.94,Default,,0000,0000,0000,,inelastic demand, is\Nwhat is the producer's
Dialogue: 0,0:02:39.94,0:02:42.29,Default,,0000,0000,0000,,surplus and the consumer's surplus?
Dialogue: 0,0:02:42.29,0:02:44.94,Default,,0000,0000,0000,,The producer's surplus is how much more
Dialogue: 0,0:02:44.94,0:02:46.36,Default,,0000,0000,0000,,money they're getting relative to their,
Dialogue: 0,0:02:46.36,0:02:48.80,Default,,0000,0000,0000,,you can view them as\Ntheir opportunity cost
Dialogue: 0,0:02:48.80,0:02:50.80,Default,,0000,0000,0000,,or their incremental marginal cost,
Dialogue: 0,0:02:50.80,0:02:52.12,Default,,0000,0000,0000,,and here we will [unintelligible]
Dialogue: 0,0:02:52.12,0:02:53.12,Default,,0000,0000,0000,,multiple times, this is the producer's
Dialogue: 0,0:02:53.12,0:02:54.45,Default,,0000,0000,0000,,surplus right over here.
Dialogue: 0,0:02:54.45,0:02:56.26,Default,,0000,0000,0000,,It's the area between the prices equal
Dialogue: 0,0:02:56.26,0:02:58.39,Default,,0000,0000,0000,,to the clearing price\Nand our supply curve.
Dialogue: 0,0:02:58.39,0:03:00.74,Default,,0000,0000,0000,,So, that's our producer surplus.
Dialogue: 0,0:03:00.74,0:03:03.57,Default,,0000,0000,0000,,Producer surplus.
Dialogue: 0,0:03:03.57,0:03:05.82,Default,,0000,0000,0000,,Our consumer surplus is where things
Dialogue: 0,0:03:05.82,0:03:06.99,Default,,0000,0000,0000,,get a little bit interesting.
Dialogue: 0,0:03:06.99,0:03:09.12,Default,,0000,0000,0000,,Consumer surplus is how much more
Dialogue: 0,0:03:09.12,0:03:10.39,Default,,0000,0000,0000,,marginal benefit people are getting
Dialogue: 0,0:03:10.39,0:03:12.46,Default,,0000,0000,0000,,than what they are paying.
Dialogue: 0,0:03:12.46,0:03:14.66,Default,,0000,0000,0000,,We've traditionally said that's the area
Dialogue: 0,0:03:14.66,0:03:17.57,Default,,0000,0000,0000,,between the demand curve and the price.
Dialogue: 0,0:03:17.57,0:03:21.05,Default,,0000,0000,0000,,But now, all of a sudden,\Nthis area is infinite.
Dialogue: 0,0:03:21.06,0:03:22.88,Default,,0000,0000,0000,,This area is infinite.
Dialogue: 0,0:03:22.88,0:03:24.20,Default,,0000,0000,0000,,One way to think about it is that
Dialogue: 0,0:03:24.20,0:03:25.88,Default,,0000,0000,0000,,these diabetics get, you could almost say
Dialogue: 0,0:03:25.88,0:03:27.66,Default,,0000,0000,0000,,close to infinite marginal benefit
Dialogue: 0,0:03:27.66,0:03:28.39,Default,,0000,0000,0000,,from that insulin.
Dialogue: 0,0:03:28.39,0:03:30.21,Default,,0000,0000,0000,,It allows them to have a healthy life.
Dialogue: 0,0:03:30.21,0:03:32.55,Default,,0000,0000,0000,,It allows them to stay alive.
Dialogue: 0,0:03:32.55,0:03:34.93,Default,,0000,0000,0000,,For them, it's essentially priceless.
Dialogue: 0,0:03:34.93,0:03:37.55,Default,,0000,0000,0000,,It's kind of an interesting idea that
Dialogue: 0,0:03:37.55,0:03:39.59,Default,,0000,0000,0000,,you have infinite consumer surplus.
Dialogue: 0,0:03:39.59,0:03:40.99,Default,,0000,0000,0000,,It's not necessarily saying that this
Dialogue: 0,0:03:40.99,0:03:42.59,Default,,0000,0000,0000,,is like a great deal for the diabetics,
Dialogue: 0,0:03:42.59,0:03:43.73,Default,,0000,0000,0000,,it's really just saying that their benefit
Dialogue: 0,0:03:43.73,0:03:45.73,Default,,0000,0000,0000,,is something that they need to survive.
Dialogue: 0,0:03:45.73,0:03:47.94,Default,,0000,0000,0000,,If this was just slightly more elastic,
Dialogue: 0,0:03:47.94,0:03:49.44,Default,,0000,0000,0000,,so if we were to get, maybe to a slghtly
Dialogue: 0,0:03:49.44,0:03:50.71,Default,,0000,0000,0000,,more real world scenario.
Dialogue: 0,0:03:50.71,0:03:52.20,Default,,0000,0000,0000,,In a real world, if things got
Dialogue: 0,0:03:52.20,0:03:53.11,Default,,0000,0000,0000,,a little bit more expensive,
Dialogue: 0,0:03:53.11,0:03:54.28,Default,,0000,0000,0000,,there might be a few diabetics who
Dialogue: 0,0:03:54.28,0:03:55.32,Default,,0000,0000,0000,,would all of a sudden try to lower
Dialogue: 0,0:03:55.32,0:03:57.38,Default,,0000,0000,0000,,their dose or something like that.
Dialogue: 0,0:03:57.38,0:03:59.91,Default,,0000,0000,0000,,The curve, in a real world, actually might
Dialogue: 0,0:03:59.91,0:04:01.78,Default,,0000,0000,0000,,have some very slight elasticity.
Dialogue: 0,0:04:01.78,0:04:03.12,Default,,0000,0000,0000,,It would still be a very steep slope,
Dialogue: 0,0:04:03.12,0:04:05.53,Default,,0000,0000,0000,,but it would actually have\Nsome slight elasticity.
Dialogue: 0,0:04:05.53,0:04:07.28,Default,,0000,0000,0000,,You could imagine if I kept taking this
Dialogue: 0,0:04:07.28,0:04:09.52,Default,,0000,0000,0000,,up and up and up, and at some point,
Dialogue: 0,0:04:09.52,0:04:11.62,Default,,0000,0000,0000,,it actually would bound the area,
Dialogue: 0,0:04:11.62,0:04:13.44,Default,,0000,0000,0000,,but it would, so maybe it goes up here.
Dialogue: 0,0:04:13.44,0:04:15.72,Default,,0000,0000,0000,,Maybe if this was like $2 million up here,
Dialogue: 0,0:04:15.72,0:04:17.78,Default,,0000,0000,0000,,then the demand would\Ngo down dramatically,
Dialogue: 0,0:04:17.78,0:04:19.78,Default,,0000,0000,0000,,but it would be bounded.
Dialogue: 0,0:04:19.78,0:04:23.05,Default,,0000,0000,0000,,But it is a very, very,\Nvery large consumer surplus.
Dialogue: 0,0:04:23.05,0:04:24.11,Default,,0000,0000,0000,,Now with that out of the way,
Dialogue: 0,0:04:24.11,0:04:25.45,Default,,0000,0000,0000,,let's think about what happens
Dialogue: 0,0:04:25.45,0:04:26.86,Default,,0000,0000,0000,,if some misguided politician decides
Dialogue: 0,0:04:26.86,0:04:28.29,Default,,0000,0000,0000,,to tax insulin.
Dialogue: 0,0:04:28.29,0:04:29.65,Default,,0000,0000,0000,,Obviously a very bad idea,
Dialogue: 0,0:04:29.65,0:04:30.72,Default,,0000,0000,0000,,and nothing that I would ever advocate,
Dialogue: 0,0:04:30.72,0:04:33.32,Default,,0000,0000,0000,,but let's think about who\Nwould bear the burden?
Dialogue: 0,0:04:33.32,0:04:34.32,Default,,0000,0000,0000,,I think you could probably guess
Dialogue: 0,0:04:34.32,0:04:35.71,Default,,0000,0000,0000,,who would bear the burden if you had
Dialogue: 0,0:04:35.71,0:04:37.45,Default,,0000,0000,0000,,to put a tax, but we'll actually see it.
Dialogue: 0,0:04:37.45,0:04:38.58,Default,,0000,0000,0000,,We'll think it through with our
Dialogue: 0,0:04:38.58,0:04:42.20,Default,,0000,0000,0000,,supply and our perfectly\Ninelastic demand curve.
Dialogue: 0,0:04:42.20,0:04:45.61,Default,,0000,0000,0000,,What ends up getting passed is a tax
Dialogue: 0,0:04:45.61,0:04:48.38,Default,,0000,0000,0000,,of $10 per vial.
Dialogue: 0,0:04:48.38,0:04:50.05,Default,,0000,0000,0000,,I'm just making it,\Ninstead of a percentage,
Dialogue: 0,0:04:50.05,0:04:51.53,Default,,0000,0000,0000,,I'm just doing it as a fixed amount
Dialogue: 0,0:04:51.53,0:04:53.31,Default,,0000,0000,0000,,so that we get kind of a fixed shift
Dialogue: 0,0:04:53.31,0:04:57.28,Default,,0000,0000,0000,,in terms of the perceived supply price.
Dialogue: 0,0:04:57.28,0:04:59.31,Default,,0000,0000,0000,,For the producers, this\Nis what they need to get.
Dialogue: 0,0:04:59.31,0:05:01.05,Default,,0000,0000,0000,,If you want them to produce 3,000 vials,
Dialogue: 0,0:05:01.05,0:05:03.28,Default,,0000,0000,0000,,they need to get $75.
Dialogue: 0,0:05:03.28,0:05:05.71,Default,,0000,0000,0000,,If you [unintelligible] that first vial,
Dialogue: 0,0:05:05.71,0:05:07.44,Default,,0000,0000,0000,,they need to get $60.
Dialogue: 0,0:05:07.44,0:05:10.51,Default,,0000,0000,0000,,What the producers need\Nto get, plus the tax,
Dialogue: 0,0:05:10.51,0:05:11.53,Default,,0000,0000,0000,,we can draw a new curve.
Dialogue: 0,0:05:11.53,0:05:13.11,Default,,0000,0000,0000,,We've done this multiple times.
Dialogue: 0,0:05:13.11,0:05:15.44,Default,,0000,0000,0000,,For the very first vial,\Nthe producer needs $60,
Dialogue: 0,0:05:15.44,0:05:17.98,Default,,0000,0000,0000,,but then you add the tax there,
Dialogue: 0,0:05:17.98,0:05:19.58,Default,,0000,0000,0000,,it's going to be $70.
Dialogue: 0,0:05:19.58,0:05:21.65,Default,,0000,0000,0000,,For 1,000 vials, it looks\Nlike it's going to be
Dialogue: 0,0:05:21.65,0:05:22.61,Default,,0000,0000,0000,,I don't know, 60 something ...
Dialogue: 0,0:05:22.61,0:05:25.98,Default,,0000,0000,0000,,you add the tax, it's\Ngoing to move up to here.
Dialogue: 0,0:05:25.98,0:05:28.36,Default,,0000,0000,0000,,For 3,000 vials, the producers need
Dialogue: 0,0:05:28.36,0:05:31.45,Default,,0000,0000,0000,,around $75, $76, you add $10 to it,
Dialogue: 0,0:05:31.45,0:05:33.78,Default,,0000,0000,0000,,it gets to $85, $86 like that.
Dialogue: 0,0:05:33.78,0:05:36.05,Default,,0000,0000,0000,,What you get is this new curve,
Dialogue: 0,0:05:36.05,0:05:39.11,Default,,0000,0000,0000,,you could use the price from the
Dialogue: 0,0:05:39.11,0:05:41.39,Default,,0000,0000,0000,,consumer's point of view,
Dialogue: 0,0:05:41.39,0:05:43.47,Default,,0000,0000,0000,,or you could view it as
Dialogue: 0,0:05:43.47,0:05:46.64,Default,,0000,0000,0000,,the supply plus tax curve.
Dialogue: 0,0:05:46.64,0:05:53.52,Default,,0000,0000,0000,,I'll call this supply plus tax curve
Dialogue: 0,0:05:53.52,0:05:54.55,Default,,0000,0000,0000,,and that's hard to read, but that
Dialogue: 0,0:05:54.55,0:05:56.06,Default,,0000,0000,0000,,says tax over there.
Dialogue: 0,0:05:56.06,0:05:57.89,Default,,0000,0000,0000,,This is the supply plus tax curve.
Dialogue: 0,0:05:57.89,0:06:00.81,Default,,0000,0000,0000,,Where does that intersect our perfectly
Dialogue: 0,0:06:00.81,0:06:02.81,Default,,0000,0000,0000,,inelastic demand curve?
Dialogue: 0,0:06:02.81,0:06:03.99,Default,,0000,0000,0000,,Well, you can imagine people,
Dialogue: 0,0:06:03.99,0:06:06.33,Default,,0000,0000,0000,,even though the prices are higher,
Dialogue: 0,0:06:06.33,0:06:10.26,Default,,0000,0000,0000,,people still have to get\Nexactly 3,000 vials per year.
Dialogue: 0,0:06:10.26,0:06:12.19,Default,,0000,0000,0000,,They intersect right at that quantity,
Dialogue: 0,0:06:12.19,0:06:14.33,Default,,0000,0000,0000,,but now we have a new equilibrium price.
Dialogue: 0,0:06:14.33,0:06:18.22,Default,,0000,0000,0000,,Our new equilibrium price\Nis exactly $10 higher.
Dialogue: 0,0:06:18.22,0:06:23.99,Default,,0000,0000,0000,,If this was $75 or $76,\Nthis is $85 or $86.
Dialogue: 0,0:06:23.99,0:06:28.72,Default,,0000,0000,0000,,This distance right over here is $10.
Dialogue: 0,0:06:28.72,0:06:29.79,Default,,0000,0000,0000,,Let's think about a few things.
Dialogue: 0,0:06:29.79,0:06:31.19,Default,,0000,0000,0000,,Let's think about the total revenue
Dialogue: 0,0:06:31.19,0:06:34.80,Default,,0000,0000,0000,,that the government is going\Nto get in this situation.
Dialogue: 0,0:06:34.80,0:06:36.55,Default,,0000,0000,0000,,The total revenue is going to be
Dialogue: 0,0:06:36.55,0:06:40.46,Default,,0000,0000,0000,,that $10 times the\N3,000 vials per year ...
Dialogue: 0,0:06:40.46,0:06:42.31,Default,,0000,0000,0000,,times 3,000.
Dialogue: 0,0:06:42.31,0:06:48.35,Default,,0000,0000,0000,,So they're going to get $30,000 per year.
Dialogue: 0,0:06:48.35,0:06:51.75,Default,,0000,0000,0000,,Let's think about whose\Nsurplus that came out of.
Dialogue: 0,0:06:51.75,0:06:53.54,Default,,0000,0000,0000,,The tax revenue, this right over here
Dialogue: 0,0:06:53.54,0:06:55.34,Default,,0000,0000,0000,,is the tax revenue.
Dialogue: 0,0:06:55.34,0:06:57.34,Default,,0000,0000,0000,,That right over there is the tax revenue.
Dialogue: 0,0:06:57.34,0:06:58.60,Default,,0000,0000,0000,,The producers are still going to have the
Dialogue: 0,0:06:58.60,0:07:00.81,Default,,0000,0000,0000,,exact same producer surplus,
Dialogue: 0,0:07:00.81,0:07:04.42,Default,,0000,0000,0000,,so all of that tax revenue came directly
Dialogue: 0,0:07:04.42,0:07:06.87,Default,,0000,0000,0000,,out of the consumer surplus.
Dialogue: 0,0:07:06.87,0:07:09.88,Default,,0000,0000,0000,,Another interesting thing to note here is,
Dialogue: 0,0:07:09.88,0:07:11.87,Default,,0000,0000,0000,,because we had this\Nperfectly inelastic demand,
Dialogue: 0,0:07:11.87,0:07:13.42,Default,,0000,0000,0000,,that even when you raise the price,
Dialogue: 0,0:07:13.42,0:07:15.83,Default,,0000,0000,0000,,it didn't lower the quantity demanded
Dialogue: 0,0:07:15.83,0:07:17.87,Default,,0000,0000,0000,,that we actually don't have\Na dead weight loss here
Dialogue: 0,0:07:17.87,0:07:19.42,Default,,0000,0000,0000,,because this was perfectly inelastic.
Dialogue: 0,0:07:19.42,0:07:21.27,Default,,0000,0000,0000,,We're actually having the\Nsame quantity produced
Dialogue: 0,0:07:21.27,0:07:26.34,Default,,0000,0000,0000,,so you have a transfer of surplus from
Dialogue: 0,0:07:26.34,0:07:28.51,Default,,0000,0000,0000,,essentially the diabetics\Nto the government
Dialogue: 0,0:07:28.51,0:07:30.54,Default,,0000,0000,0000,,in this situation, but you don't have any
Dialogue: 0,0:07:30.54,0:07:36.07,Default,,0000,0000,0000,,lost surplus here because\Nthere's no lost area,
Dialogue: 0,0:07:36.07,0:07:38.87,Default,,0000,0000,0000,,I guess you could say, between where
Dialogue: 0,0:07:38.87,0:07:43.86,Default,,0000,0000,0000,,the supply curve and the\Ndemand curves intersect.
Dialogue: 0,0:07:43.86,0:07:45.07,Default,,0000,0000,0000,,Another way to think about it is
Dialogue: 0,0:07:45.07,0:07:47.83,Default,,0000,0000,0000,,the quantity demand\Ndid not go down because
Dialogue: 0,0:07:47.83,0:07:51.00,Default,,0000,0000,0000,,the price went up.