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In the last video, we first thought about externalities, the negative externalities of having plastic bags around. It causes litter, it might damage animals and the environment in some way. Were assuming And we assumed in that video that we were able to calculate the actual external cost of a plastic bag. This two cents a bag is the impact on litter in the environment. Then we were able to figure out that if we factor this in, instead of just having the regular marginal cost cover the suppliers, if we added that marginal cost curve to the external cost, we would get a supplier plus external costs, marginal cost curve, and then wed get what is actually the optimal price and quantity of plastic bags so that we actually do not eat into our surplus by creating all of this negative surplus where the total cost of the bags are higher than the total benefit. One thing that we did not touch on in that video, is how does this actually happen? If we just let things be, and we just had the
