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Presentation
Cover Title
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Scenarios

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Scenarios'

The queen conch is a large marine mollusk found in shallow waters of sea
grass in the Caribbean. These waters are so shallow, and so clear, that a
single diver may harvest many conch in a single day. Not only is conch
meat a local delicacy and an important part of the local diet, but the large
ornate shells are used in art and can be crafted into musical instruments.
Also, since nobody owns the ocean or the conch that crawl on the sand
beneath it, no one individual has an incentive to protect that resource and
responsibly harvest it.

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Jens Martensson
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 scenarios'
Thousands of years ago, human life expectancy is believed
to have been in the range of 20 to 30 years. By 1900,
average life expectancy in the United States was 47 years.
By 2015, life expectancy was 79 years. Most of the gains
in life expectancy in the history of the human race
happened in the 20th century.

The rise in life expectancy seems to stem from two

primary factors. First, systems for providing clean water
and disposing of human waste helped to prevent the
transmission of many diseases. Second, changes in public
behavior have advanced health. but due to the cause of
information fail persons fail to seek healthcare.

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scenarios'
The typical driver today is in a car that weighs 4,089 pounds. The major
culprits in this evolution of car size are sport utility vehicles (SUVs) with an
average weight size of 4,500 pounds. The contribution of driving to global
warming is directly proportional to the amount of fossil fuel a vehicle requires
to travel a mile. SUV drivers use more gas to go to work or run their errands,
increasing fossil fuel emissions. Each year, federal, state, and local
governments spend $33.2 billion repairing our roadways. Damage to
roadways comes from many sources, but a major culprit is the passenger
vehicle, and the damage it does to the roads is proportional to vehicle
weight.

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scenarios'
A firm will set a specific price for a good that is available to all
consumers. The quantity of the good will be less and the price will
be higher (this is what makes the good a commodity). This firm has
little to no competition, because their goods are unique. Thus,
creating a competitive market for other business.

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•What is
Market Failure

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What is market failure
• Market Failure: is the inability of the market to
allocate resources efficiently to best satisfy the
society’s wants.

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•What is Public
and Merit
Goods

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 Comparison of Public and Merit goods

Compare A Compare B

VS.
• The provision of public goods
• Merit goods are goods for which social benefits to
• Public goods are goods that are collectively the community of the consumption of the goods far
consumed by society. They possess two outweigh the private benefits to the consumer. For
characteristics: non-excludability and non- example: healthcare and education.
expansibility. Non- excludability means that a
• Society under consumes merit goods; consumes
consumer cannot be excluded from consuming
less than the (socially optimum quantity).
the good, evening if her or she did not pay for it.
Non – exhaustibility means that consumption of • Firms also under produce merit goods; they
public good by one individual does not reduce the produce less than the (social optimum quantity).
amount available for other individuals to
consume. (free-rider)

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•What is
Externalities'

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Externalities

•Externalities are spill-over effects of production or consumption that fall on the third party.

Negative externality of
VS. Positive externality of
consumption consumption
The act of smoking destroys the You are consuming education at this
health of the smoker but it also moment and you are doing it for the
destroys the health of those around benefits it brings to you but there
them (3rd Party effects) through are also external benefits and
passive smoking. (public society as a whole benefit from
nuisance) people taking more education.
(positive benefits)

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Monopoly

• Monopoly:
• A market structure characterized by a single seller, selling a unique product in the market. In a monopoly market,
the seller faces no competition, as he is the sole seller of goods with no close substitute.

• If there is a monopoly operating. prices are higher an output are lower that if a number of firms were operating in
that industry. A firm is allocatively efficient when the prices of a product is equal to marginal cost (P= MC).

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Questions

1) The inability of the market to allocate resources efficiently to best satisfy society wants __________________. (1
mark )
•  
1) By referring to the features of public goods, discuss whether roads are public goods?(5 marks)
•  

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Questions

1) Explain the three market failures ?

• (5 mark)

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Large image slide

FUNK
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 ES
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Launch

IN
BOFF

Thank
You
Ms Cheddesingh