Externality

2. Provide an example of a government-created monopoly. Is it a bad public policy? Why? In many cases, the emergence of monopolies linked to the provision by the government to an individual or company exclusive rights to sell the goods (tobacco, salt, etc.). A classic example of a monopoly that arises due to the possession of a resource, such as a diamond company. The power of a government-created monopoly over the market depends on the existence of close substitute products. If people view emeralds

Alternatives 2. The externality is the cost or the benefit that will affects someone who is not in the part of the cause of the cost or benefit. In other words, externalities are the effect caused by a certain party, which influence the people who are outside of the party. There are four types of externalities, which are positive production, positive consumption, negative production and negative consumption. Pollution is one of the typical examples of negative production externality. For every Chinese

Contents Section 1 2 1.1 Market Failure 2 1.2 Public goods 2 1.2.1 Relation between Market failure and Public goods 2 1.3 Merit goods 2 1.3.1 Relation between Merit goods and Market Failure 2 1.4 Externalities 2 1.5 Imperfect competition 3 Section 2 4 2.1 UK government policy on the environment 4 2.2 About the policy 5 2.2.1 Water quality 5 2.3 Instruments the government use to achieve their policy 5 2.4 A justified evaluation of the performance of the policy in relation

efficient, is imposing emission fees known by economists as a Pigovian tax. Under a system of Pigovian taxes, the government charges for the damage done by polluting. By doing so it converts the external cost into an internal cost (internalizes the externality). According to the article “Equilibrium Pollution and Economic Development in China” there is one such levy system in place whereby it formally requires that a fee be paid by any enterprise whose effluent charge exceeds the legal standard. This

services is a merit good, a socially desirable but often under-provided good. In a free perfect competition market structure of nanny services, market failure, the inability to recognise allocative efficiency, arise as a positive externality of consumption. A positive externality of consumption is when the consumption of a good provides social benefits that exceed the private benefits enjoyed by a consumer. In [Figure 1] assuming ceteris paribus, private benefit is an incentive for both demand and

She had only browsed the store for a couple of minutes when she came across the perfect skirt. It was a short, cherry red fringed skirt made of the finest Italian cotton. She disappeared in the fitting room for a couple of minutes to try it on. Camera flashes light up the hallway as she takes pictures of herself modeling the skirt from different angles. However, the more she fell in love with the skirt the more hesitant she became of the pricey $400 price tag. Unable to justify the price of the skirt

Since the airline industry is a direct product of market conditions, it is greatly affected by all externalities. Many people noticed a decline in travel after the September 11th tragedy occurred due to safety concerns. When there is a huge increase in fares that definitely interferes with the demand for travel; it causes the price of tickets to continue

Question 1 (a) Why is the equilibrium between demand and supply important in economics? (10 marks) Equilibrium shows equality between demand and supply. The equilibrium is a point where supply equals demand. Demand is how much consumers are able to buy of a good or service. Supply is how much producers are able to supply of a good or service. Any changes in demand or supply this will cause the equilibrium price to change therefore It is very important in economics as the equilibrium price determines

3.firms offer products that are similar, but not perfect substitutes. In shoe industry firms producing similar products but it has separate qualities and brand images because of that products are not perfect substitutes. The shape, trademarks and the pattern of shoe is differ from one brand to another brand this would lead the product more precious for its buyers. 4.Price Makers Firms that operating in shoe industry are price makers alternatively than price takers due to the fact that each and every

building industry affected by the economy? This is what we will be exploring in the paper. There are different areas within the industry that can be affected. First we will look at supply and demand. Then continue to the positive and negative externalities, and how wages inequality is measured. Then finally, we will look at the monetary and fiscal policies that affect the housing industry. With the information we will have a better understanding of how the home building industry is affected. When