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hello everybody another policy diagram here indirect tax but now to solve the negative externality in consumption how do we start by showing this diet very important diagram a very common exam question well we start by labeling the axis price costs and benefits itamp;#39;s a market failure diagram you have to put all three of the y-axis quantity on the x-axis if you know the market youamp;#39;re working with you can apply an axis right we start by drawing the negative xrt in consumption diagram start there and then weamp;#39;ll add on the tax to show how the policy solves the failure but letamp;#39;s start with the negative externality of consumption lots of videos on my channel to tell you how to draw this letamp;#39;s do that quickly so we know that itamp;#39;s a problem with the benefits curves weamp;#39;ve enable that NSE is equal to NBC is equal to supply fully enabled thereamp;#39;s the marginal private benefit of the marginal social benefit to the left I for now weamp;#
