Public Goods, Common Resources, and Artificially Scarce Goods. Общественные товары, общие ресурсы и искусственно редкие товары.
A
good is excludable
if the supplier of that good can prevent people who do not pay from
consuming it. A good is rival
in
consumption
if the same unit of the good cannot be consumed by more than one
person at the same time.
When a good is nonexcludable, the supplier cannot prevent consumption by people who do not pay for it. A good is nonrival in consumption if more than one person can consume the same unit of the good at the same time.
When goods are nonexcludable, there is a free-rider problem: consumers will not pay producers, leading to inefficiently low production. When goods are nonrival in consumption, the efficient price for consumption is zero. But if a positive price is charged to compensate producers for the cost of production, the result is inefficiently low consumption.
Public good. It is both nonexcludable and nonrival in consumption. Most forms of public-good provision by the private sector have serious defects, and in fact no individual has an incentive to pay for providing the efficient quantity of a public good because each individual’s marginal benefit is less than the marginal social benefit (sum of individuals’ marginal benefits). These are primary justifications for the existence of government, that provides the public goods (e.g. national defense, scientific research) paid for with taxes.
To determine the efficient quantity (the marginal social benefit equals the marginal cost) of public good to supply, governments rely on cost-benefit analysis. However, it imposes certain difficulties, since individuals tend to overstate the good’s value to them.
Common resource is rival in consumption but nonexcludable. The problem with common resources is overuse: a user depletes the amount of the common resource available to others but does not take this cost into account when deciding how much to use the common resource. Like negative externalities, a common resource can be efficiently managed by Pigouvian taxes, by the creation of a system of tradable licenses for its use, or by making it excludable and assigning property rights.
Artificially scarce good is excludable but nonrival in consumption. Because the good is nonrival in consumption, the efficient price to consumers is zero. However, because it is excludable, sellers charge a positive price, which leads to inefficiently low consumption.
Information Asymmetry. Adverse Selection and Moral Hazard. Информационная асимметрия. Враждебный выбор и моральный ущерб.
Information asymmetry - A situation in which one party in a transaction has more or superior information compared to another. This often happens in transactions where the seller knows more than the buyer, although the reverse can happen as well. Potentially, this could be a harmful situation because one party can take advantage of the other party's lack of knowledge.
Information Asymmetry can lead to two main problems:
Adverse selection- immoral behavior that takes advantage of asymmetric information before a transaction.
For example, a person who is not be in optimal health may be more inclined to purchase life insurance than someone who feels fine. Or someone with the worst credit risk may be more inclined to hide this fact and borrow money from your bank.
Moral Hazard- immoral behavior that takes advantage of asymmetric information after a transaction. For example, if someone has fire insurance they may be more likely to commit arson to reap the benefits of the insurance. Or with money already borrowed, a person may do something stupid to blow the money and become unable to pay back.
These problems arise because the negative consequences of a case are now (partially) the responsibility of the insurance company. A party makes a decision about how much risk to take, while another party bears the costs if things go badly, and the party insulated from risk behaves differently from how it would if it were fully exposed to the risk.
With increased advancements in technology, asymmetric information has been on the decline as a result of more and more people being able to easily access all types of information.
National Accounting: GDP, GNP, CPI, PPI, GDP Deflator, Real, Nominal, Per Capita, Expanded Circular- Flow Diagram. Национальный учет. ВВП,ВНП,ИПЦ, ИЦП, ВВП дефлятор, реальный, номинальный, на душу населения, расширенная диаграмма кругооборота.
Gross domestic product (GDP) is one of the primary indicators of a country's economic performance. Gross domestic product or GDP measures the total value of all final goods and services produced in the economy during a given year. It does not include the value of intermediate goods. Approaches to calculate GDP: 1) Add up the value added by all goods produced (Included: domestically produced final g&s-s; not included: Intermediate ones, inputs, used g-s, fin-al assets, foreign-produced g&s-s); 2) Add up aggregate spending on domestically-produced final goods and services. This results in the equation: GDP = C + I + G + X – IM; 3) Add up total factor income earned by households from firms (wages, profits, IRs, etc).
Gross National Product (GNP) is the market value of all products and services produced in 1 year by labor and property supplied by the residents of a country. Unlike GDP, which defines production based on the geographical location of production, GNP allocates production based on ownership.
Nominal GDP is the value of all final goods and services produced in the economy during a given year, calculated using the prices of a current year in which the output is produced.
Per capita GDP is measured as nominal GDP divided by total population of the country. Usually, higher per capita GDP means a higher standard of living.
Real GDP is the total value of the final goods and services produced in the economy during a given year, calculated using the prices of a selected base year. This allows comparing the economy's production for each year more accurately. Otherwise, it might seem like the economy is producing more, when just prices are going up. Real GDP is what nominal GDP would have been if there was no price changes from the base year. It eliminates the effect of inflation.
GDP deflator measures the price level by calculating the ratio of nominal to real GDP. (GDPn/GDPr*100)
The consumer price index, or CPI, measures the cost of the market basket of a typical urban American family (the most common measure of the aggregate price level).
T
he
producer
price index (wholesale PI)
measures
changes in the prices of goods purchased by producers.
The PPI often responds to inflationary or deflationary pressures more
quickly than the CPI. As a result, the PPI is often regarded as an
“early warning signal” of changes in the inflation rate.
An expended circular-flow diagram connects 4 sectors of the economy: households, firms, gov-t, rest of the world via 3 types of markets: factor m-ts, m-ts for g-s& s-s, financial m-s.