Economics - externalities

Land&capital common char.:durable-can be bought&sold,can be rented out for a period of time;
Differeces:land is fixed & can't be increased if demand for land increases-rent & pricing are ways of rationising scarce (limited) resources; demand for land & capital determine the price according to the demand&supply
Charging rents on scarce resources helps an economy to use its resources efficiently many of our resources are owned by nobody,they're common resources; when you pollute the air,water,land,tou impose costs on other members of society-externalities

Anti-povetry policies:income security programs:
1.social benefit if you are unemployed; 2.food stamps:allow low income families to purchase food at a discounted price; 3.aid to families with dependends(children); 4.aid for disable/invalid people
2 views of povetry:1-redult of social & economic conditions over which the poor people have no control.arg:poor schooling,broken families, discrimination,lack of job opportunities
2-problem of individual behaviour,which is responsible for being poor


Goverment should cut back on welfare programs
Push unemplyed people to find employment
LDC-poor,povetry, alot of people working in agr.; low level of income;low school atendance because:children have to work,parents can't efford school,schools are remote; high infant mortality solutions:improve the education sys.&healthcare,attract foreign invest.,family planning,elliminate or alleviate the external debts
Lorens curve-it's a plotting of data showing the % of income enjoyed by each % of housholds ranked according to their income.



Concept of invisible hand leads self-interest buyers&sellers in a market to maximise the total benefit that society can get from a market when a market outcome affects parties other than buyers & sellers,side-effects are called externalities externalities cause market to be inefficient & therefore fail to maximise consumer surplus
Consumer surplus is the difference btw. what the consumer is willing to pay for a unit of good & the prise he actually pays
Major causes of market failure are differences btw. the marginal benefits & costs on which decis. are based&the actual marginal social ben&costs

Types of externalities
1. negative -when the impact on the bystander is adverse,ex:passive smoking; 2.positive-when the impact on the bystander is beneficial,ex:immunisation,restorin historical buildings

Negative ext.in prod.:
The intersection of the demand curve& social-cost curve determines the optional output level.the socially optimal output is less than the market equilibrium qty.


Achieving the socially optimal output:by increasing the externalities
Technology policy:goverment intervention in the economy that aims to promote technology-enhancing
Patent laws are a form of tech.pol. that gives individuals(firms) with patent protection a property right over its invention.the patent is then said to internalise the externalities
Social requalation:is the case of goverment power to intervene in markets to reduce the risk of accidents & disease