Museums 2014

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presentation on positive externalities

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<ul><li> 1. ShouldGovernmentssubsidiseMuseums?BrainBlast Reasons why theyshould and reasons why theyshould spend on differentservices</li></ul> <p> 2. LO: to be able to make ajudgement on governmentintervention 3. Bee Keeping1. Explain why Bee-Keeping has positiveexternalities.2.Should thegovernment haveBee-Keepers aspublic sectorworkers?3.What would be theimplications if theydid 4. ShouldGovernmentssubsidiseMuseums? 5. PositiveExternalitiesAre those benefits that areexternal to an exchange.They are third partyeffects ignored by theprice mechanism.With positive externalities,less is produced andconsumed than thesocially optimal level.In this case: ..The positive externalitiesare the benefits that areexternal to the exchangeof the museums 6. Public Good Quasi- Public Good Non-Rivalry Non-Excludability No free rider problem 7. Marginal PrivateBenefitsIn a free market:consumers only haveconcern about theprivate benefits andprivate costs fromconsuming a good orservice.The price they arewilling to payreflects/shows themagnitude of thebenefit. 8. Marginal SocialBenefitsMPB + External Benefit =Social BenefitsExternal Benefit =Private Benefits SocialBenefits ( differencebetween on a graph)External Benefitsincreasedisproportionally withoutput consumed(when MPB and MSB 9. So we shouldsubsidiseMuseums This is because. Supply of Museums isinelastic SO Increase consumption ofgood/service Therefore there is anincrease in the benefit tosociety Diagram: Triangle ofwelfare gain increases Price Social Optimum isReached andQuantity/Output SocialOptimum is ReachedIt depends on: themagnitude of the subsidy 10. Something wehaven't doneMerit Goods and DemeritGoods: Under produced andUnder consumede.g. Healthcare andEducation Over produced and Overconsumede.g. Tobacco, Alcohol andGamblingMerit Good- a good thatbrings unanticipatedbenefits to itsconsumers, such that 11. Game Either: I went to the museum andlearnt.. I went to the museum andbought a... I went to the museum andhad a positive externality of I went to the museum andhad a private benefit of A Museum itself might havean increased _______________once itwas subsidised Name a merit good Name a public good Draw a positive externalitygraph 12. HWoninspiringeconomics.June 2014 unit 1 question 9(e) </p>