...retail market for coffee if there is a large increase in city centre rents. 4.In the UK, students face increasing tuition fees. Discuss the benefits and costs to society of abolishing all tuition fees. 5.Discuss three policies to reduce the level of cigarette smoking amongst under 21s. 6.Discuss the extent to which governments should subsidise companies who are developing cars which run on clean fuels such as hydrogen? 7.Discuss whether the government is mistaken to worry about monopoly power? 8.Discuss the advantages and disadvantages of the government intervening in agricultural markets? 9.Discuss the effects on UK business of a rise in fuel prices. 10. Discuss whether the government should end free health care for people and make them take out private health care insurance like in the US? 11. Discuss the role that pollution permits could play in reducing global warming 12. Discuss the case for implementing a congestion charge for driving into Birmingham city centre. 13. Discuss the micro...
Words: 8844 - Pages: 36
...Assignment 2: Externalities ECO 405 Prof Bergan August 11, 2013 An externality is something that, while it does not monetarily affect the producer of a good, does influence the standard of living of society as a whole (Kelly, Krugman, & Robin, 2008 ).There are two types of externalities positive and negative both play important roles in our everyday living. When there is a cost of externality than that is considered negative and when there is a benefit of an externality it is considered a positive externality. Positive externality is defined as benefits that accrue to third parties not involved in an economic activity. These benefits can be passed on due to either the consumption or production of a commodity by society (Kelly, Krugman, & Robin, 2008 ). Negative externalities are costs that third parties have to bear when a good is consumed or produced. Environmental cleanup can be considered as positive externalities. When the environment is clean we all benefit as a society but do not increase profits for the company responsible for it. Likewise, research and new technological developments create gains on which the company responsible for them cannot fully capitalize. Another positive externality is education when people are getting a better education this is a benefit for the country as a whole as more foreign direct investments will flow into the country. This will definitely increase employment and income for people who can’t find a job. Immunizations, such...
Words: 1163 - Pages: 5
...hazardous to human health(Grammaticas.D 2013). The air tastes of coal dust and car fumes, two of the main sources of pollution, says a BBC correspondent. Economic growth has left air quality in many cities notoriously poor. Viewed this problem from economic point, air pollution can cause serious impact on economy development. For example, in 2008, Beijing spend a lot of sources to solve air pollution problem for host Olympics game. So there is a close relationship between environment and economy, the environment is an important factor for the society, they influence each other environment support social economic but when environment is damaged, then the economy will be impeded. That's kind of problem need to use externalities theory to explain. Externalities means when activity in a market affects individuals other than the buyers and sellers of the good. Externalities can be positive or negative, what happened in this image can be categorized into negative aspects. Why this problem occurs in the real world, based on book explanation, a negative externality occurs when an individual or firm making a decision does not have to pay the full cost of the decision. If a good has a negative externality, then the cost to society is greater than the cost consumer is paying for it. Since consumers make a decision based on where their marginal cost equals their marginal benefit, and since they don't take into account the cost of the negative externality, negative externalities result in market...
Words: 578 - Pages: 3
...ECONOMICS FOR BUSINESS AND MANAGEMENT BC115008S SID: 1118562 Q1:”People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices” (Adam Smith, 1776, Book 10, Ch. VIII). Often, as Adam Smith noted above, the marketplace is influenced by the growth of monopolies, mergers, and cartel-type activities which often use their market power to the disadvantage of consumers. a) Examine the arguments in favour of a free-market system of resource allocation b) Explain how market failure can occur and suggest how the government in a country of your choice has sought to correct those market failures. 1.0 FREE MARKET SYSTEM ‘’If you leave the Market going alone, it will balance as there was an invisible hand’’ (Smith,1776). Free markets have many virtues. Arguably, the most recognized is the expansion of individual choice, and thus freedom, through mutually beneficial exchange. (Bauer, 2002, p.171) 1.1 Basis of the free Market: According to Adam Smith ,the free market system was based in: Free enterprise or ‘’Laisser faire’’, individualist, risk, capitalism. * Free enterprise (Laisser faire): The government does not run anything. * Individualist: Only individual matter, not community, not society. * Risk: Everyone can make a lot or can loose a lot. Everyone take his owns risks. * Capitalism: where the main thing is to make profit...
Words: 2138 - Pages: 9
...Principles Of Economics Strayer University ECON 100 March 12th 2012 Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis It is a real case of negative externalities both in consumption and production. production of alcohol causes pollution too. The two possible solutions suggested by economists are: Coase theorem-They can negotiate by themselves for compensation without any government intervention if the property rights are secured and the cost of negotiation is not high. Pigouvian- taxes or regulations. Drunk driving is included. An economist would increase cost through added tax and reduce availability. (answer.yahoo.com, 2012). When measuring the cost of alcohol abuse in any city in the U.S. we must understand what make the assumptions of alcohol abuse comprehensible and to focus on the relevant alcohol abuse. We have to think about such things as health services and medical expenses, premature death, loss of productivity, and alcohol related crimes. In total, the U.S. economy loses an estimated $185 billion each year to alcohol-related problems, according to the National Institute of Alcohol Abuse and Alcoholism. We use the assumptions to help explain, Economics is a discipline, but it is not an exact discipline. Economic theory simplifies situations because it would be nearly impossible to predict and...
Words: 817 - Pages: 4
...abuse comprehensible and to focus on the relevant alcohol abuse. We have to think about such things as health services and medical expenses, premature death, loss of productivity, and alcohol related crimes. In total, the U.S. economy loses an estimated $185 billion each year to alcohol-related problems, according to the National Institute of Alcohol Abuse and Alcoholism. We use the assumptions to help explain, Economics is a discipline, but it is not an exact discipline. Economic theory simplifies situations because it would be nearly impossible to predict and include every relevant variable and factor. Just look at the cost of drunk driving. Drunk driving is a insightful subject to many people because so many lives have been affected by this crime. The National Highway Traffic Safety Administration reports that alcohol-related motor vehicle crashes kill someone every 31 minutes and nonfatal injure someone every two minutes. During 2005, 16,885 people in the U.S. died in alcohol-related motor vehicle crashes, comprising 39% of all traffic-related deaths. What has become known as the Coase Theorem is the proposition that in the absence of transactions cost the level of production of goods or services in an industry in which there are externalities is independent of whether or not the party who perpetrates negative externalities is legally liable for the costs of the externalities on other parties? How does the alcohol abuse hurt me and what...
Words: 1938 - Pages: 8
...Jason Alves May 4, 2015 Economics 102 Externalities In our economy, the government is always trying to improve the allocation of resources; one of the methods that improve the allocation of resources in our economy is the alteration of market failures that are caused by externalities. Externalities occur when an external source receives some of the costs of benefits of a certain good that the actual buyer or seller does not receive. There are two sides to externalities; there are both negative and positive externalities. First of all, a negative externality occurs when a decision made from a source (Individual or firm) does not have to pay the full amount of their decision. When talking about a good or a service that has a negative externality, the consumer is usually paying less than society. When a consumer makes a decision, typically they weight their marginal cost and benefit, but they do not weight the negative externality, which creates a huge disorganized market. As for the producer, they do not take the responsibility of external costs, so these costs are passed on to society. In addition, negative externalities occur everyday, from our jobs, homes and even children. In an article from BBC news, it explains the negative externalities that England received from smoke-free legislatures introduced. In the article it stated, “A study showed a 12% drop in the first year after the law to stop smoking in enclosed public places came into force. The authors say there...
Words: 1368 - Pages: 6
...Externalities arise when a person or a firm’s actions affect the welfare of others in ways that are not reflected in market prices (spillover effect). In this essay, I will discuss the characteristics of externalities, their control and implications on the free market as well as discussing the ways in which governments can assist to develop and implement policies that can encourage positive externalities. (Lipsey and Chrystal, 2001) (Donohue, et al, 2008:RB2). Externalities could be defined as the costs or benefits that arise from private and public consumption or production. External costs of production occur when a factory emissions cause excessive pollution levels that create breathing difficulties for some members of society. Moreover, external costs of consumption arise when people use their vehicles, affecting others negatively through exhausts emissions. (Lipsey and Chrystal, 2001), (Donohue, et al, 2008:RB2). On the bright side, externalities are not always negative and can often benefit the society; Toyota’s corporate responsibility programs act as examples of this. They train their employees to minimise waste production in the workplace as part of their “Think Green! Program”, there is an inherent external benefit to society as they help to reduce environmental impact and there is a potential that such employees will pass their knowledge on to other members of society at a later date, this creates...
Words: 451 - Pages: 2
...solution to the externalities created by smoking in public places. Introduction Partial smoking bans have become increasingly popular in Western democracies in recent years and tend to revolve around the banning of smoking in public areas. This essay will explore economic arguments and solutions relating to the externalities caused by smoking. The central problem at the heart of this issue is the over-consumption of cigarettes and the problem that the externalities of smoking cause for the general public and therefore this essay will show that efforts to curb total level of cigarette consumption can be approached from a variety of different perspective (see graph below). The essay will begin by discussing the economics of externalities before moving on to examine Pigovian and Coasian theoretical frameworks. The final section of the essay will apply these frameworks and will show that on balance a Pigovian tax in conjunction with a partial ban is the socially optimum solution. For the purposes of this essay an outright ban will refer to a total ban of cigarette consumption in society. [pic] Fig. 1 – Negative Consumption Externalities (Tutor2u, 2013). The economics of externalities The notion of externalities is not straightforward to define and Vanhove argues that externalities is one of the “vaguest and most ambiguous terms in economic science” (Vanhove 2011: p.285, Papandreou, 1998). In general, however, there is a consensus in economic circles that externalities refer to an...
Words: 1970 - Pages: 8
...Essay: The Health Care, Universal Insurance and International Comparison of Health Care Syetem Introduction In recent years, the availability and affordability of health insurance in United States has becomes the subject of much debate. About one in seven American has no health insurance at all, and for many people who are insured, the cost of coverage is a financial hardship. This situation has led some people to call for the government to provide health insurance for all citizens like other developed countries e.g. Canada, United Kingdom, Japan, Germany etc. Under this type of system, the state government or the federal government would provide insurance coverage, fixed by taxes for everyone. Those who support government-run health care believe that it has many benefits, including universal coverage, lower costs, and greater efficiency. Opponents contend that such a system would require budgets controls, forcing the government to decide whether and when person can receive certain health service. They believe universal health care would lead to lower quality care, long delay, greater government bureaucracy, and greater tax increase. However, whether universal insurance or not, the current health care system needed a reform and I believe Most American will prefer Universal health insurance to any other health care system because it guarantee coverage for everybody. Thesis: the rising cost of health care is a very critical issue in public debate nowadays. The situation...
Words: 3993 - Pages: 16
...Competitive Strategies and Government Policies ECO3665 Externalities When looking at economics we have learned the invisible hand always pushes the market to arrive at the best outcome for society as a whole. However sometimes what is good for a market or in this case WalMart may not be good for society. WalMart has a global presence which creates negative and positive externalities. WalMart does business with suppliers all over the world and has to obey a variety of government regulations in different countries. A negative externality WalMart is accused of is Pollution. The pollution is created by manufacturers who supply products to WalMart. WalMart has taken the approach not only to comply with regulations set by the governments, they go above and beyond regulations leading other businesses and setting a higher standard than required. WalMart insures their suppliers are also complying with government regulations, if suppliers do not comply they will no longer conduct business with them. WalMart’s model is responsible sourcing; they conduct audits verifying compliance of worker safety, well being and insuring environment friendly programs are enforced. In 2009, WalMart launched the Sustainability Index in collaboration with The Sustainability Consortium which will help WalMart and its suppliers reduce waste in the supply chain and create synergy so that waste can be recycled and eliminated and improve buying and selling of products. WalMart currently has three sustainability...
Words: 437 - Pages: 2
...these goods/service provided for there to be a profit made. Some of these are:- * Street Lights * Public Parks * Pavements Merit Goods Merit goods are goods and services provided to an economy by the government, as they are not provided by the private sector as they are unable to make a profit from these goods because there would be no one willing to pay for these or maybe even unable to be for them, as these goods/services are seen as not of enough importance. Some of these good are:- * Armed Forces * Health Care * Education Externalities Externalities is when something happens or something some does that could affect someone else. The government intervenes to try and improve negative externalities, by on most occasions introducing new legalisation to reduce these negative externalities for examples, paying tax on car pollution or fines giving people who have been illegally dumping. Examples of externalities are:- * People driving around in their cars creates a lot of pollution with in the air which affects others passing by, making them unwell and possibly having to go to hospital. * People go to college/university to be educated which then helps them...
Words: 1145 - Pages: 5
...EESA10 H3-S L30 "HUMAN HEALTH AND THE ENVIRONMENT" Assignment #2 Issued: Monday, March 9th Dept. of Environmental Sciences, University of Toronto Scarborough, Toronto, Canada Due: Monday March 23th at 5pm, box outside SW-511A TA: Steven Huryn [pic] Question 1: Reference dose or RfD, is the maximum amount of acceptable oral dose of a toxic substance set by the EPA (United States Environmental Agency).( Agency for Toxic Substances and Disease Registry, 2009) The EPA uses RfD as a benchmark to set other regulations to prevent people from being exposed to amount exceeding the RfD standard. The EPA also has a unique RfD for every substance it evaluates. However, often separate acute and chronic RfDs are determined for the same substance. (US Environmental Protection Agency, 2014) Cancer slope Factor, or CSF, is used to approximate the potential risk of cancer associated with exposure to a carcinogenic or potentially carcinogenic substance. (US Environmental Protection Agency, 2014) This approximation is usually expressed in units of a population affected per mg of substance/ kg body-weight/ day. A toxicity value that defines quantitatively the relationship between dose and response, or the slope factor, is calculated when the chemical is a known or probable human carcinogen. And different than RfD, High-quality Human data, or an epidemiological studies, on carcinogens is preferable to animal data. However, when human data is limited, the attention is given to...
Words: 1626 - Pages: 7
...BUSINESS SCHOOL - Undergraduate Assignment Feedback Front sheet SECTION A: |(to be completed by the student) | |Please complete Section A in Block Capitals making sure that you include your Student Number, Module Code and Group Number. FAILURE to| |do so may result in your assignment being delayed. If you are unsure of any of the above please check at the Business School Student | |Centre Reception. | |Student Number (s): |U1320055 | | | | |Programme:(e.g. Business Management) |Business Management | |Module Title: (e.g. Studying for Business) |Public Finance |Seminar Group |00 | |Module Code: |FN6002 |Word Count |1524 | I confirm that no part of this assignment. except where clearly quoted and referenced. has been copied from material belonging to any other person e.g. from a book...
Words: 2019 - Pages: 9
...considered along with GDP to know the exact wellbeing of individuals and company is, social indicators. Social indicators concentrates on observable outcomes in health, education, poverty. Per capita high income does not ensure that there is equity. Majority of the citizens may be poor and wealth may be concentrated in few hands leading even though per capita income is high. Obviously in that case kit can not be said that average people are well off. There are four social indicators which tell about wellbeing of people: Self sufficiency, Equity, Health and Social cohesion. (Giovannini, Hall & Marco) These social indicators furnish information about several dimensions that per capita GDP does not cover. Other factor to be considered is inflation. The wellbeing of the people and country depends on purchasing power. If a country has high per capita income and high inflation, actual purchasing power would be low. In the calculation of GDP, the goods and services ;produced are valued at current market price, which ignores inflation. The real GDP is GDP adjusted for inflation. Per capita income calculated on Real GDP gives more realistic picture of the wellbeing of the country. Another factor which should be included in GDP calculation to get better picture of well being is externalities. GDP ignores externalities. Externalities such as pollution and environmental deterioration etc play very important role in the wellbeing of people. High GDP may...
Words: 453 - Pages: 2
