help please (1 Viewer)

[Over97]

could someone tell me

what is the difference between a 'MERIT' good and a 'PUBLIC' good.

thanks

edit

o and, can someone also tell me what the difference is between and "EXTERNALITY" and an "EXTERNAL DISECONOMY"

cheers

 

[timmii]

merit good: something the government feels is important for society but under-appreciated, and they will thus subsidise. e.g the arts, opera, ABC (hehehehehe)
public good: something that is non-excludable (everyone can use it, whether they pay or not) and non-rival (one person's use of it does not detract from another's use)...e.g defence forces

externality: cost/benefit to society not taken into account by the market based price mechanism. e.g pollution imposes a cost on society for which the producers may not necessarily pay. It may be therefore easier for them to dump toxic waste in the lakes rather than to spend money and clean it up properly, for which the public bears teh burden of the pollution...

external diseconomy: when costs rise as output increases (externally), reducing efficiency. For instance, initially it helps business if everyone is located in the city and near each other. However eventually there will be so much congestion that it will take people so much longer to get to work and get home and inefficiencies develop...

ok that wasnt a good example, but i'll try to think of something better soon.

 

[Over97]

thankyou my good friend