Positive economics is focused on analyzing cause and effect relationships to describe and explain economic phenomena, such as predicting that if the price of fish increases, demand will decrease. Normative economics examines the economy from an ethical perspective on what it should or ought to be, making value judgments about whether economic events are good or bad. An example of a normative statement is that those earning higher incomes should pay more in taxes than those with lower incomes. Normative economics involves subjective assessments rather than objective analysis.
The document describes the circular flow of income model of the economy. It shows the flows of incomes and expenditures between households and businesses. Households supply resources to businesses through factor markets in exchange for money. Businesses then use those resources to produce goods and services, which they sell to households through product markets in exchange for money. The model can be expanded to include the government sector, which purchases goods and services from businesses, hires resources from households, provides public goods to both, and finances these activities through tax payments from households and businesses.
This document discusses microeconomics and consumer behavior topics including utility maximization, demand, and consumer choice. It defines key concepts like total utility, marginal utility, and the law of diminishing marginal utility. It provides examples to illustrate these concepts and how consumers make choices to maximize their utility subject to budget constraints. Rational consumers will allocate their limited income between goods in a way that equalizes the marginal utility per dollar between each good. The document also discusses substitution and income effects that occur when prices change.
Monopolistic competition refers to a market with many sellers offering differentiated but similar products. Key characteristics include:
1) Large numbers of buyers and sellers, but less than perfect competition. Sellers offer heterogeneous products.
2) Products are differentiated through branding and perceived differences, allowing sellers some monopoly power as price makers.
3) In the short run, firms maximize profits where marginal cost equals marginal revenue. In the long run, free entry leads to normal profits as the market reaches equilibrium with excess capacity.
This document discusses various types of market failures including externalities, public goods, and imperfect information. It provides examples of negative and positive externalities and how they can lead to inefficient market outcomes. Methods for dealing with externalities include direct regulation, tax incentives, and market incentives. Public goods are nonexclusive and nonrival, but their value is difficult to determine via markets due to free rider problems. Imperfect information between buyers and sellers can also cause market failures. While government intervention may aim to correct market failures, governments can also fail due to issues like lack of proper incentives, information, and flexibility.
Externalities are spill-over effects from production and consumption where no compensation is paid. They can be positive or negative. Negative production externalities occur when the social costs of production exceed private costs, such as pollution from factories. This leads to overproduction and deadweight loss. Positive consumption externalities exist when social benefits exceed private benefits, like public education, resulting in underconsumption. Government intervention may be needed to correct market failures from externalities and achieve social optimum. Externalities must be evaluated on their net social impact rather than in isolation.
1. Market failure occurs when the conditions for perfect competition are not met, resulting in inefficient resource allocation. Some causes of market failure include monopoly, externalities, public goods, imperfect information, and non-existent markets.
2. Externalities occur when the actions of one economic unit unintentionally impact another in an uncompensated way, such as pollution from factories. This leads to a divergence between private and social costs/benefits.
3. For goods with public goods characteristics of non-rivalry and non-excludability, like national defense, there is no market mechanism to efficiently allocate resources, as they cannot be priced. This results in underprovision of public goods.
Positive economics is focused on analyzing cause and effect relationships to describe and explain economic phenomena, such as predicting that if the price of fish increases, demand will decrease. Normative economics examines the economy from an ethical perspective on what it should or ought to be, making value judgments about whether economic events are good or bad. An example of a normative statement is that those earning higher incomes should pay more in taxes than those with lower incomes. Normative economics involves subjective assessments rather than objective analysis.
The document describes the circular flow of income model of the economy. It shows the flows of incomes and expenditures between households and businesses. Households supply resources to businesses through factor markets in exchange for money. Businesses then use those resources to produce goods and services, which they sell to households through product markets in exchange for money. The model can be expanded to include the government sector, which purchases goods and services from businesses, hires resources from households, provides public goods to both, and finances these activities through tax payments from households and businesses.
This document discusses microeconomics and consumer behavior topics including utility maximization, demand, and consumer choice. It defines key concepts like total utility, marginal utility, and the law of diminishing marginal utility. It provides examples to illustrate these concepts and how consumers make choices to maximize their utility subject to budget constraints. Rational consumers will allocate their limited income between goods in a way that equalizes the marginal utility per dollar between each good. The document also discusses substitution and income effects that occur when prices change.
Monopolistic competition refers to a market with many sellers offering differentiated but similar products. Key characteristics include:
1) Large numbers of buyers and sellers, but less than perfect competition. Sellers offer heterogeneous products.
2) Products are differentiated through branding and perceived differences, allowing sellers some monopoly power as price makers.
3) In the short run, firms maximize profits where marginal cost equals marginal revenue. In the long run, free entry leads to normal profits as the market reaches equilibrium with excess capacity.
This document discusses various types of market failures including externalities, public goods, and imperfect information. It provides examples of negative and positive externalities and how they can lead to inefficient market outcomes. Methods for dealing with externalities include direct regulation, tax incentives, and market incentives. Public goods are nonexclusive and nonrival, but their value is difficult to determine via markets due to free rider problems. Imperfect information between buyers and sellers can also cause market failures. While government intervention may aim to correct market failures, governments can also fail due to issues like lack of proper incentives, information, and flexibility.
Externalities are spill-over effects from production and consumption where no compensation is paid. They can be positive or negative. Negative production externalities occur when the social costs of production exceed private costs, such as pollution from factories. This leads to overproduction and deadweight loss. Positive consumption externalities exist when social benefits exceed private benefits, like public education, resulting in underconsumption. Government intervention may be needed to correct market failures from externalities and achieve social optimum. Externalities must be evaluated on their net social impact rather than in isolation.
1. Market failure occurs when the conditions for perfect competition are not met, resulting in inefficient resource allocation. Some causes of market failure include monopoly, externalities, public goods, imperfect information, and non-existent markets.
2. Externalities occur when the actions of one economic unit unintentionally impact another in an uncompensated way, such as pollution from factories. This leads to a divergence between private and social costs/benefits.
3. For goods with public goods characteristics of non-rivalry and non-excludability, like national defense, there is no market mechanism to efficiently allocate resources, as they cannot be priced. This results in underprovision of public goods.
This document discusses positive externalities, which occur when a party engages in an activity that unintentionally benefits other parties. It provides examples of activities that create positive externalities, such as education, public broadcasting, healthcare, and environmental protection. When positive externalities are present, the social benefits of an activity exceed the private benefits. However, in a free market there will be underproduction of goods with positive externalities due to this market failure. The document discusses how government can intervene through subsidies or regulation to encourage the optimal level of consumption that accounts for the social benefits.
This document discusses externalities and how they can lead to market inefficiencies. It defines externalities as uncompensated impacts of one person's actions on another. Negative externalities like pollution lead to overproduction, while positive externalities like education benefits lead to underproduction. Government policies like Pigouvian taxes or tradable permits can help internalize these externalities and achieve socially optimal production levels. Private solutions via bargaining are also possible using the Coase theorem, but transaction costs may prevent private solutions in some cases.
Gross National Product (GNP) is the total market value of all goods and services produced in a given year. It includes the value of final goods and services consumed domestically, gross private investment in new capital, government purchases of goods and services, and net exports. There are two main approaches to estimating GNP: the expenditure approach which looks at total national expenditures, and the income approach which examines total incomes like wages, profits, rents, and taxes. National income is GNP minus depreciation and represents the net increase in production in a year.
Welfare economics analyzes the optimal allocation of resources and goods to maximize social welfare. It considers both total welfare achieved and how it is distributed. Pareto optimality is a state where no individual can be made better off without making another individual worse off. Ricardian rent theory states that rent arises from differences in land fertility and is determined by the price of agricultural output, not the other way around. Quasi rent is the temporary surplus earned on capital equipment when supply is fixed in the short run.
This document discusses various investment concepts including:
1. Types of investments such as induced, autonomous, physical, financial and business assets.
2. Key determinants of investment including income, interest rates, Tobin's Q, and marginal efficiency of capital.
3. Multiplier effects including money, fiscal, and investment multipliers which measure the response of endogenous variables to exogenous changes.
4. The accelerator effect whereby growth in GDP encourages businesses to invest more in fixed assets like factories and machinery, further stimulating economic growth.
This document discusses public goods and market failure. It defines public goods as non-excludable and non-rival, meaning that individuals cannot be excluded from use and one individual's use does not reduce availability to others. It provides examples such as national defense. The document notes that public goods cause market failure due to missing markets and underprovision by the private sector. It also discusses quasi-public goods and how technology has blurred the distinction between public and private goods in some cases.
All the three methods of national income accounting are explained with mathematical questions and answers. It is very helpful for the NCERT and SCERT plus two commerce and humanities students who have to learn these methods in the second chapter of macroeconomics.
Market failures occur when the free market does not allocate goods and services efficiently. Some common causes of market failure are incomplete markets, indivisibilities, public goods, externalities, and asymmetric information. A prominent example is the free rider problem with public goods, where individuals can benefit from the good without paying for it, leading to underprovision. This occurs because with public goods, one person's consumption does not reduce availability to others and people cannot be excluded from consuming it. The free rider problem demonstrates how market failure can arise from public goods.
This is part of an introduction to indifference curve analysis. A budget line shows the combinations of two products that a consumer can afford to buy with a given income – using all of their available budget
The gradient of the budget line reflects the relative prices of the two products
The document discusses the economic problem of scarcity. It explains that scarcity exists because resources are limited while wants are unlimited. Every economy, regardless of its type, faces scarcity and must decide how to allocate limited resources among competing uses. The document also introduces the production possibilities frontier to illustrate scarcity and opportunity cost. It outlines several problems faced by economies, including what and how much to produce, how to utilize resources fully and efficiently, and how to achieve economic growth.
This document discusses subsidies and taxation as tools to correct market failures. It explains that subsidies aim to change relative prices and are given to producers, while taxation can be specific or ad valorem and is typically levied on producers. Both subsidies and taxes can distort markets by shifting supply curves and altering price signals. Their welfare effects depend on who bears the costs and benefits.
1) Welfare economics is concerned with measuring living standards and utility. It uses Pareto efficiency as a standard to determine if a resource allocation is efficient.
2) For an allocation to be Pareto efficient, it must satisfy three conditions: efficiency in consumption, efficiency in production, and product-mix efficiency.
3) A social welfare function can be used to rank different allocations and determine the allocation that provides the highest overall welfare. Utilitarian and Rawlsian approaches provide different forms for the social welfare function.
The document summarizes Keynesian income determination through the aggregate demand-aggregate supply model. It defines consumption and investment functions, which together determine aggregate demand. Consumption depends on income through the marginal propensity to consume. Investment is assumed constant in the short-run. Equilibrium income is reached at the point where aggregate demand equals aggregate supply. This can be modeled as either the AD-AS approach where equilibrium Y satisfies C+I=C+S, or the savings-investment approach where I=S. Numerical examples are provided to illustrate the equilibrium income calculation under each approach.
The document discusses the concepts of supply and demand. It states that as price increases, demand decreases, and as price decreases, demand increases. Conversely, as price increases, supply increases, and as price decreases, supply decreases. The document explains that consumers buy more of something when it is cheaper to minimize expenses and maximize utility, while producers sell more of something when the price is higher to minimize costs and maximize profits. The equilibrium price is reached where the quantity demanded equals the quantity supplied. [/SUMMARY]
Monopolistic competition is a market structure with many small businesses that produce differentiated products. Each business has some control over price due to product differentiation but faces competition from substitutable products. Key features include differentiated but substitutable products, many sellers and buyers, free entry and exit, and profit maximization through product differentiation and non-price competition like advertising. In long run equilibrium, firms earn only normal profits as entry by new firms eliminates excess profits. Output is lower and prices higher under monopolistic competition compared to perfect competition.
Specialisation & the division of labourmattbentley34
Specialization occurs at different levels of economic activity and can provide several key advantages. It involves concentrating production on specific products or tasks. Within businesses and organizations, specialization allows workers to focus on discrete tasks and gain expertise through repetition, improving productivity. Countries and regions also specialize in goods where they have a comparative advantage. While specialization increases output and profits, it can result in repetitive work that lacks variety and skills, potentially reducing worker satisfaction over time.
The document discusses supply and the law of supply. It defines supply as the willingness and ability of sellers to produce and offer different quantities of a good at different prices. The law of supply states that quantity supplied increases as price increases, and decreases as price decreases, resulting in a direct relationship between price and quantity supplied. Supply can be illustrated using supply schedules and supply curves, with the curve shifting right when supply increases and left when supply decreases. Factors that cause supply curves to shift include resource prices, technology, taxes, subsidies, quotas, number of sellers, expectations, and weather.
Market failure and government interventions slidesgilem488
The document discusses market failures and government interventions in markets. It defines several key economic concepts like allocative efficiency, production efficiency, and market failures that occur due to externalities, public goods, and other conditions not being met. It then describes different roles of government in regulating markets, allocating resources, redistributing income, and stabilizing growth. The government provides public goods through taxation since the private market fails to do so. It may also intervene by taxing "demerit goods" and subsidizing "merit goods".
Every choice involves a trade-off where you must give up something to get something else. The best alternative given up is called the opportunity cost, which is the cost of a decision in terms of the forgone best alternative. For example, the opportunity cost of going to college is the money that could have been earned working instead, and the opportunity cost of a gardener growing carrots is the other crops that could have been grown instead, such as tomatoes or potatoes.
1) Governments provide subsidies to producers and consumers to influence markets. Subsidies lower costs of production, shifting supply curves outward and lowering prices while increasing quantities traded.
2) The total spending on a subsidy equals the subsidy per unit multiplied by output. Subsidies are justified to encourage investment, protect jobs, and achieve social and political goals, but they may reduce efficiency and create dependency.
3) Cost-benefit analyses evaluate subsidies by valuing their costs and benefits, but some impacts are difficult to value and projections involve uncertainty.
Social protection, agriculture and the From Protection to Production projectFAO
http://www.fao.org/economic/PtoP/en/
Presented during the From Protection to Production project workshop, 24-25 September 2013, FAO HQ.
The From Protection to Production (PtoP) project is a multi-country impact evaluation of cash transfers in sub-Saharan Africa. The project is a collaborative effort between the FAO, the UNICEF Eastern and Southern Africa Regional Office and the governments of Ethiopia, Ghana, Kenya, Lesotho, Malawi, Zambia and Zimbabwe. Project activities are mainly funded by the Regular Fund, the DFID Research and Evidence Division and the EU.
Social responsibility refers to voluntary efforts by businesses to satisfy stakeholder expectations through activities that benefit society. Businesses undertake social responsibility activities to improve their public image, ensure long-term survival and growth by maintaining community support, and satisfy employees. Social responsibility involves considering the interests of consumers, investors, the community, employees, government, and suppliers. Common social responsibility activities include improving infrastructure, providing education, healthcare, skills training, and addressing unemployment and environmental issues in local communities.
This document discusses positive externalities, which occur when a party engages in an activity that unintentionally benefits other parties. It provides examples of activities that create positive externalities, such as education, public broadcasting, healthcare, and environmental protection. When positive externalities are present, the social benefits of an activity exceed the private benefits. However, in a free market there will be underproduction of goods with positive externalities due to this market failure. The document discusses how government can intervene through subsidies or regulation to encourage the optimal level of consumption that accounts for the social benefits.
This document discusses externalities and how they can lead to market inefficiencies. It defines externalities as uncompensated impacts of one person's actions on another. Negative externalities like pollution lead to overproduction, while positive externalities like education benefits lead to underproduction. Government policies like Pigouvian taxes or tradable permits can help internalize these externalities and achieve socially optimal production levels. Private solutions via bargaining are also possible using the Coase theorem, but transaction costs may prevent private solutions in some cases.
Gross National Product (GNP) is the total market value of all goods and services produced in a given year. It includes the value of final goods and services consumed domestically, gross private investment in new capital, government purchases of goods and services, and net exports. There are two main approaches to estimating GNP: the expenditure approach which looks at total national expenditures, and the income approach which examines total incomes like wages, profits, rents, and taxes. National income is GNP minus depreciation and represents the net increase in production in a year.
Welfare economics analyzes the optimal allocation of resources and goods to maximize social welfare. It considers both total welfare achieved and how it is distributed. Pareto optimality is a state where no individual can be made better off without making another individual worse off. Ricardian rent theory states that rent arises from differences in land fertility and is determined by the price of agricultural output, not the other way around. Quasi rent is the temporary surplus earned on capital equipment when supply is fixed in the short run.
This document discusses various investment concepts including:
1. Types of investments such as induced, autonomous, physical, financial and business assets.
2. Key determinants of investment including income, interest rates, Tobin's Q, and marginal efficiency of capital.
3. Multiplier effects including money, fiscal, and investment multipliers which measure the response of endogenous variables to exogenous changes.
4. The accelerator effect whereby growth in GDP encourages businesses to invest more in fixed assets like factories and machinery, further stimulating economic growth.
This document discusses public goods and market failure. It defines public goods as non-excludable and non-rival, meaning that individuals cannot be excluded from use and one individual's use does not reduce availability to others. It provides examples such as national defense. The document notes that public goods cause market failure due to missing markets and underprovision by the private sector. It also discusses quasi-public goods and how technology has blurred the distinction between public and private goods in some cases.
All the three methods of national income accounting are explained with mathematical questions and answers. It is very helpful for the NCERT and SCERT plus two commerce and humanities students who have to learn these methods in the second chapter of macroeconomics.
Market failures occur when the free market does not allocate goods and services efficiently. Some common causes of market failure are incomplete markets, indivisibilities, public goods, externalities, and asymmetric information. A prominent example is the free rider problem with public goods, where individuals can benefit from the good without paying for it, leading to underprovision. This occurs because with public goods, one person's consumption does not reduce availability to others and people cannot be excluded from consuming it. The free rider problem demonstrates how market failure can arise from public goods.
This is part of an introduction to indifference curve analysis. A budget line shows the combinations of two products that a consumer can afford to buy with a given income – using all of their available budget
The gradient of the budget line reflects the relative prices of the two products
The document discusses the economic problem of scarcity. It explains that scarcity exists because resources are limited while wants are unlimited. Every economy, regardless of its type, faces scarcity and must decide how to allocate limited resources among competing uses. The document also introduces the production possibilities frontier to illustrate scarcity and opportunity cost. It outlines several problems faced by economies, including what and how much to produce, how to utilize resources fully and efficiently, and how to achieve economic growth.
This document discusses subsidies and taxation as tools to correct market failures. It explains that subsidies aim to change relative prices and are given to producers, while taxation can be specific or ad valorem and is typically levied on producers. Both subsidies and taxes can distort markets by shifting supply curves and altering price signals. Their welfare effects depend on who bears the costs and benefits.
1) Welfare economics is concerned with measuring living standards and utility. It uses Pareto efficiency as a standard to determine if a resource allocation is efficient.
2) For an allocation to be Pareto efficient, it must satisfy three conditions: efficiency in consumption, efficiency in production, and product-mix efficiency.
3) A social welfare function can be used to rank different allocations and determine the allocation that provides the highest overall welfare. Utilitarian and Rawlsian approaches provide different forms for the social welfare function.
The document summarizes Keynesian income determination through the aggregate demand-aggregate supply model. It defines consumption and investment functions, which together determine aggregate demand. Consumption depends on income through the marginal propensity to consume. Investment is assumed constant in the short-run. Equilibrium income is reached at the point where aggregate demand equals aggregate supply. This can be modeled as either the AD-AS approach where equilibrium Y satisfies C+I=C+S, or the savings-investment approach where I=S. Numerical examples are provided to illustrate the equilibrium income calculation under each approach.
The document discusses the concepts of supply and demand. It states that as price increases, demand decreases, and as price decreases, demand increases. Conversely, as price increases, supply increases, and as price decreases, supply decreases. The document explains that consumers buy more of something when it is cheaper to minimize expenses and maximize utility, while producers sell more of something when the price is higher to minimize costs and maximize profits. The equilibrium price is reached where the quantity demanded equals the quantity supplied. [/SUMMARY]
Monopolistic competition is a market structure with many small businesses that produce differentiated products. Each business has some control over price due to product differentiation but faces competition from substitutable products. Key features include differentiated but substitutable products, many sellers and buyers, free entry and exit, and profit maximization through product differentiation and non-price competition like advertising. In long run equilibrium, firms earn only normal profits as entry by new firms eliminates excess profits. Output is lower and prices higher under monopolistic competition compared to perfect competition.
Specialisation & the division of labourmattbentley34
Specialization occurs at different levels of economic activity and can provide several key advantages. It involves concentrating production on specific products or tasks. Within businesses and organizations, specialization allows workers to focus on discrete tasks and gain expertise through repetition, improving productivity. Countries and regions also specialize in goods where they have a comparative advantage. While specialization increases output and profits, it can result in repetitive work that lacks variety and skills, potentially reducing worker satisfaction over time.
The document discusses supply and the law of supply. It defines supply as the willingness and ability of sellers to produce and offer different quantities of a good at different prices. The law of supply states that quantity supplied increases as price increases, and decreases as price decreases, resulting in a direct relationship between price and quantity supplied. Supply can be illustrated using supply schedules and supply curves, with the curve shifting right when supply increases and left when supply decreases. Factors that cause supply curves to shift include resource prices, technology, taxes, subsidies, quotas, number of sellers, expectations, and weather.
Market failure and government interventions slidesgilem488
The document discusses market failures and government interventions in markets. It defines several key economic concepts like allocative efficiency, production efficiency, and market failures that occur due to externalities, public goods, and other conditions not being met. It then describes different roles of government in regulating markets, allocating resources, redistributing income, and stabilizing growth. The government provides public goods through taxation since the private market fails to do so. It may also intervene by taxing "demerit goods" and subsidizing "merit goods".
Every choice involves a trade-off where you must give up something to get something else. The best alternative given up is called the opportunity cost, which is the cost of a decision in terms of the forgone best alternative. For example, the opportunity cost of going to college is the money that could have been earned working instead, and the opportunity cost of a gardener growing carrots is the other crops that could have been grown instead, such as tomatoes or potatoes.
1) Governments provide subsidies to producers and consumers to influence markets. Subsidies lower costs of production, shifting supply curves outward and lowering prices while increasing quantities traded.
2) The total spending on a subsidy equals the subsidy per unit multiplied by output. Subsidies are justified to encourage investment, protect jobs, and achieve social and political goals, but they may reduce efficiency and create dependency.
3) Cost-benefit analyses evaluate subsidies by valuing their costs and benefits, but some impacts are difficult to value and projections involve uncertainty.
Social protection, agriculture and the From Protection to Production projectFAO
http://www.fao.org/economic/PtoP/en/
Presented during the From Protection to Production project workshop, 24-25 September 2013, FAO HQ.
The From Protection to Production (PtoP) project is a multi-country impact evaluation of cash transfers in sub-Saharan Africa. The project is a collaborative effort between the FAO, the UNICEF Eastern and Southern Africa Regional Office and the governments of Ethiopia, Ghana, Kenya, Lesotho, Malawi, Zambia and Zimbabwe. Project activities are mainly funded by the Regular Fund, the DFID Research and Evidence Division and the EU.
Social responsibility refers to voluntary efforts by businesses to satisfy stakeholder expectations through activities that benefit society. Businesses undertake social responsibility activities to improve their public image, ensure long-term survival and growth by maintaining community support, and satisfy employees. Social responsibility involves considering the interests of consumers, investors, the community, employees, government, and suppliers. Common social responsibility activities include improving infrastructure, providing education, healthcare, skills training, and addressing unemployment and environmental issues in local communities.
The document discusses health systems and financing. It begins by defining a health system as all actors, institutions, and resources that undertake health actions, with the primary intent of improving health. Not all policies that influence health are part of the health system. The document then discusses the goals of health systems, including improving health and ensuring financial contribution. It outlines the key functions of health systems as stewardship, financing, resource generation, and service delivery. The document emphasizes the importance of aligning financing with national health plans to avoid fragmentation. It also discusses concepts of coverage, effectiveness, and factors that influence health outcomes.
This document discusses economics, the environment, and sustainability. It covers several key points:
1. Economic systems depend on natural, human, and manufactured capital. Market systems are influenced by subsidies, taxes, and information availability.
2. Governments intervene in markets to correct failures like pollution. Economists disagree on balancing economic growth and protecting natural capital.
3. Businesses aim to make profits, but sustainability means staying in business long-term. Tools like eco-labeling, taxes, and regulations can incentivize reducing pollution and waste.
4. Poverty and inequality are growing issues that require solutions like education, health initiatives, and investing in small infrastructure. Transitioning to a green
From protection to production: The role of cash transfer programs in fosterin...FAO
Presentación de Benjamin Davis (FAO), realizada durante el Sexto Seminario de Transferencias Condicionadas de Ingresos, realizado en Santiago de Chile el 29 y 30 de septiembre 2011.
Community health insurance in Uganda by Dr Sam Orach, UCMBachapkenya
Dr. Sam O. Orach discussed community health insurance in Uganda, noting its origins among burial groups in western and southwestern Uganda. There are now several types of community health insurance schemes in Uganda, though they all began as provider-managed schemes. The schemes provide benefits like reduced catastrophic health expenditures and better health seeking behaviors. However, they face challenges like lack of political will, inability of communities to match rising costs, and operating in an environment of perceived "free" government health services. Innovations like introducing performance-based financing could help improve community health insurance schemes in Uganda.
- Externalities occur when there are differences between private and social costs and benefits. Negative externalities like pollution can cause market failure due to overproduction, while positive externalities like education benefits cause underproduction.
- Public goods are nonexcludable and nonrival, so markets fail to provide them efficiently without government. Examples include national defense and street lighting.
- Merit goods have social benefits exceeding costs and generate positive externalities, so governments encourage their production through subsidies. Healthcare is an example. Demerit goods are the opposite and are taxed to reduce consumption.
- Market imperfections from monopolies, asymmetric information, and immobile factors can also cause markets to allocate resources inefficiently and fail to maximize
This presentation by Allan FELS AO (Professor, University of Melbourne, Monash & Oxford and former Chair of the Australian Competition and Consumer Commission) was made during the session on Competition in public markets held at the 16th meeting of the OECD Global Forum on Competition on 8 December 2017. More papers and presentations on the topic can be found out at oe.cd/28n
The document provides an overview of liberalization, privatization, and globalization in India. It defines each concept and outlines some of their key advantages and disadvantages. Liberalization refers to reducing government restrictions on trade. Privatization is the transfer of business ownership from public to private sectors. Globalization is increasing economic interconnection between countries. Reasons for implementing these policies in India included reducing debt, inflation, and inefficiencies in public sectors. The document also provides examples of how each concept impacted specific Indian companies through a PESTLE analysis.
The Sabin Vaccine Institute's Sustainable Immunization Financing program works in 22 countries to establish sustainable funding for immunization programs. The program facilitates advocacy and institutional changes through targeted efforts. It coordinates with government ministries, parliaments, and the private sector to develop innovative financing solutions. The goal is to move countries from relying on outside funding for immunization to sustainable, domestic ownership. This involves inducing changes in key public institutions like ministries of health and finance to develop new practices and funding mechanisms for immunization.
This document defines economics and its key concepts. It discusses economics as the study of wealth, choices, and allocating scarce resources. It also covers economic systems like markets, command, and tradition for allocation. It provides frameworks for understanding decisions using concepts like marginal benefits and costs. Finally, it outlines some basic economic problems facing the Philippines like poverty, infrastructure, and environmental sustainability.
Bouquet: SIERA Workshop on The Pillars of Horizon2020Mustafa Jarrar
The document summarizes key aspects of Horizon 2020, the European Union's research and innovation program from 2014 to 2020. It discusses the program's three main pillars of excellence in science, industrial leadership, and tackling societal challenges. It notes the increased focus on innovation and bringing ideas to market. It outlines the types of funding actions, eligibility requirements, evaluation criteria, and opportunities for participation by countries outside the EU like Palestine. The presentation aims to highlight opportunities for Birzeit University under Horizon 2020.
The Eastern Ontario Local Food Conference (EOLFC 2013) provided a great opportunity to share information, learn about success stories and gather information on innovative local food businesses, projects and best practices. The conference was organized by KEDCO (Kingston Economic Development Corporation) and the Ministry of Agriculture and Food and the Ministry of Rural Affairs. The theme of the conference was Innovation Driving Local Food and it was held December 3, 2013 at the Ambassador Hotel in Kingston, Ontario, Canada. This topic is OMAF and MRA's - local food strategy and funding opportunities.
Sustainable Financing of EAS for Scaling of Ag Innovations. Nov. 20, 2013MEAS
Presentation given by Dr. Paul McNamara, University of Illinois at Urbana-Champaign, and director of the MEAS project, during the Agricultural Sector Council webinar on November 20, 2013. The presentation focuses on approaches and issues in the sustainable financing of extension services for the scaling of agricultural innovations
economic systems (market, planned/command and mixed)Dr. Arifa Saeed
The document defines different types of economic systems and goods. It discusses the key features and characteristics of market economies, planned economies, and mixed economies. A market economy relies on private ownership, price mechanisms, and competition. A planned economy involves central government planning and rationing. A mixed economy combines elements of both market and planned economies, with both public and private involvement.
Food Assistance and Institutional Demand: Supporting Smallholder Farmers to F...UNDP Policy Centre
Presented at The State of Food and Agriculture 2015 (SOFA) workshop held at FAO's headquarters in Rome on July 1st, 2014. The presentation explained the concept of Institutional Demand as a feature of Social Protection that links agricultural producers with local and assured local/regional markets. Institutional demand primarily consists of state purchases of produce from smallholder farmers that is then distributed through social protection networks (community kitchens, food banks, schools, etc) to fight hunger.
Sustainable Financing of EAS, by Paul McNamaraMEAS
This document summarizes a presentation given by Dr. Paul McNamara on sustainable financing of extension services in developing countries. The presentation outlines the financing challenges faced, including low government support for agriculture, overreliance on projects, and lack of linking budgets to performance. It provides a conceptual framework that distinguishes public, private, and toll goods. It also discusses best fit approaches like public financing with decentralized delivery and introducing user fees. The presentation calls for more rigorous evaluations of impacts and experiments on alternative financing models.
Gyan Lab is a social innovation that aims to address gaps in the Indian education system by focusing on problem solving skills rather than just theoretical learning. It provides concise, research-driven curriculum connected to real-world applications with a focus on social values and national pride. Gyan Lab's programs cover fields like science, technology and vocational skills from grades 3 to 9. It also offers short workshops and customized programs. Gyan Lab's goal is to reach 100,000 students within 5 years and 1 million students within a decade through a sustainable business model and collaboration with other organizations to drive systemic change in Indian education.
Economic growth is measured as an increase in the quantity and quality of goods and services produced. It is difficult to accurately measure across societies due to various factors. Infrastructure development is important for economic growth as it enhances productivity and competitiveness. Public infrastructure includes facilities like transportation, water, power, and telecommunications that are developed and owned by the government for public use. Infrastructure requires significant investment and can be financed through taxes, user fees, or public-private partnerships.
Similar to Unit 1 Micro: Positive Externalities (20)
The document outlines ways to challenge and enrich ambitious economics students. It recommends encouraging students to think counter-intuitively, write in more depth, and explore the work of interesting economists. Suggested activities include student reading groups, an online magazine, investor challenges, economics societies, entrepreneurship competitions, external essay competitions, and external enrichment lectures and summer schools. The goal is for students to be ambitious, questioning, develop context awareness, and build a portfolio of economics and finance experiences.
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2. Positive Externalities
• Positive externalities create external benefits to 3rd parties
• Activities said to generate positive externalities include:
– Social returns from investment in education & training
– Positive benefits from health care and medical research
– Benefits from vaccination and immunization programmes
– Provision of flood protection systems & fire safety equipment
– Restored historic buildings and monuments
– External benefits from usage of public libraries and museums
– Externalities from inward migration of population
• Population diversity
• More innovation
3. Social benefits defined
• Social benefits refer to the total benefit to society
from a good ie the benefit to individuals and any
beneficial unintended spill over effects on third
parties.
• Social benefits are found by adding together the
private and external benefits of a given economic
activity.
4. Social benefits
Private
Benefits
+ External benefits = Social
Benefits
Benefits to
individual
consumers or
firms of their
economic
activity
Benefits to others of
individual
consumers or firms
economic activity
Total benefits
to society of a
given economic
activity
Benefits to
first parties -
individuals
Benefits to third
parties - others
Total benefits
to society –
everyone
5. Positive Externalities
Flood protection schemes,
immunization and galleries and
museums all provide external
benefits
Left to itself, would the free-
market fail to provide sufficient
products that yield positive
externalities?
6. Positive Externalities – the key points
• With positive externalities the social benefit >
private benefit
• Individual consumers may under-value and under-
consume these goods and services
• The under-valuation of the private benefit of
consuming a product may be as a result of
imperfect information
• Under consumption / under provision leads to
market failure
7. Social Benefits from Education & Training
• Improved social skills and awareness of citizenship
• Greater long-term contribution to the economy
– Higher productivity
– Improved employability
– Impact on competitiveness from an improvement in human
capital
– All of the above should help to contribute to a higher trend rate
of growth
• Higher expected earnings might provide increased tax
revenues for the government
• Diffusion of knowledge and understanding
8. Vaccinations
• Outline some of the private benefits to people
from a vaccination programme (for example a
programme run in a developing country)
• Outline some of the possible external benefits
from this programme
– Short term external benefits
– Longer-term external benefits
9. Externalities: Problems of measurement
• Many positive externalities are intangible
– Human relationships
– Cultural awareness
• Normative values are involved
• However - some external benefits can be
measured
– Productivity effects
– Employment effects
– Health outcomes
14. Positive Externalities & Social Welfare
Costs
Benefits
Output (Q)
PB
PC = SC
SB
Qp Qs
External Benefit
15. Positive Externalities & Social Welfare
Costs
Benefits
Output (Q)
PB
PC = SC
SB
Qp Qs
External Benefit
Under-provided
16. Positive Externalities & Social Welfare
Costs
Benefits
Output (Q)
PB
PC = SC
SB
Qp Qs
External Benefit
Loss of economic welfare
17. Positive externalities – correcting for market
failure
• Positive externalities cause mean social benefits
exceed private costs resulting in underproduction,
• There is a case for some form of government
intervention designed to increase production and
consumption of activities that lead to positive
externalities.
• The issue is which form of intervention is most
efficient and most equitable in achieving the
desired social optimum level of production.
19. Encouraging Consumption / Provision
• Government subsidy
– Designed to reduce the private cost of consumption or reduce
the cost of supply
– Lower costs should cause an expansion of demand
• Student grants and low-cost loans?
• Subsidies to fund free entrance to museums and other
heritage sites
• Command and Control techniques
• Minimum school leaving age
• Compulsory health immunisation programmes
• Improved information flows to potential consumers
• Health awareness programmes
20. Free entry to museums – the arguments
Is there a strong economic case
for the government subsidising
free entry to our major museums?
22. Economic arguments
• Case for subsidy / free
entry
• Positive externalities
• Informational benefits
• More visitors – higher non-
entrance fee revenues
• Boost to British tourism
23. Counter arguments
• Which museums should be free?
• Risk of dependency on the subsidy?
• Do people value things as much when they are free?
• Diminishing returns?
• Low Ped – requires expensive subsidy to boost numbers
• Opportunity cost of the money used
Editor's Notes
The existence of production and consumption externalities creates a divergence between either the private and social costs of production or the private and social benefits of consumption.
External benefits are the benefits of positive externalities expressed in terms of money
A well educated labour force is more flexible & productive thereby and so less likely to be unemployed. Training workers similarly increases human capital, improving the supply side of the economy and international competitiveness. But will businesses invest in enough training if there is a risk that their workers will leave?
With positive externalities, there are external benefits from production and/or consumption – as a result, the socially efficient output is greater than current output
Market failure also occurs when firms ignore the positive external effects of their production.
The demand curve is a measure of private benefit. Adding positive externalities to D gives social benefit. SB = PB + EB.
The equilibrium level of output delivered by a free market is allocatively inefficient. SMB = SMC at Qs. The market has under produced The welfare loss triangle ABC quantifies the amount of welfare loss resulting from underproduction
Positive externalities cause mean social benefits exceed private costs resulting in underproduction, therefore there is a case for some form of government intervention designed to increase production and consumption of activities that lead to positive externalities.