经济学第四章.pptVIP

Price of university education Quantity of university education 0 Q1 P1 Supply Market equilibrium without subsidy Positive externality = amount of subsidy Market equilibrium with subsidy = efficient equilibrium D2 = social benefit and private benefit after subsidy P2 Q2 D1 = private benefit before subsidy Positive externality and subsidies Price of electricity Quantity of electricity 0 Q1 P1 S1 = private cost before tax Demand Market equilibrium without tax Cost of pollution = amount of tax imposed by government P2 Q2 S2 = social cost and private cost after tax Market equilibrium with tax Negative externality and taxes Tradeable emissions allowances government can issue a fixed quantity of emission allowances, which can then be bought and sold in the market rewards firms who reduce emissions, as they can sell their allowances penalises firms with high emissions, as they must buy more emission allowances An alternative to taxes … Currently produce 12 units of pollution Maximum permitted level of pollution is set at 10 units Unable to reduce pollution below 12 units Buy credits Reduces pollution to 8 units Given credit for 2 units Credits are purchased And finally… We have covered? Loads .... concepts of consumer surplus and producer surplus concept of economic efficiency, and use a graph to illustrate how economic efficiency is reduced when a market is not in competitive equilibrium demand and supply graphs to analyse the economic impact of price ceilings and price floors demand and supply graphs to analyse the economic impact of taxes define positive and negative externalities and identify examples of each analyse government policies to achieve economic efficiency in a market with externalities What do you do now? read or re-read Hubbard. (2010) Chapter 4, your notes, listen again to the lecture recording focus on what you did not understand in the lecture fill in the missing gaps any problems consultations prepare for the tutorial information on Blackboard