By Colin Bamford, Susan Grant
ISBN-10: 1107679516
ISBN-13: 9781107679511
This 3rd version for Cambridge foreign AS and a degree Economics syllabus (9708) is punctiliously up-to-date for first exam from 2016. Written via skilled authors in a fascinating and available variety, this Coursebook offers complete assurance of the syllabus and rigorous and correct content material for AS and a degree Economics scholars. incorporated during this ebook is a unfastened scholar CD-ROM containing revision aids, extra questions and actions. A Teacher's CD-ROM is usually on hand.
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Extra info for Cambridge International AS and A Level Economics Coursebook
Example text
These seemingly obvious qualities of private goods are useful since they help us understand what is meant by public goods. 8 Explain, for your economy, whether each of the following may be described as a private, a public or a quasi-public good: ■ the local police service ■ a chocolate bar ■ a public park ■ a firework display ■ a stretch of road ■ street lighting ■ a public cricket pitch ■ a museum. Chapter 1: Basic economic ideas and resource allocation Merit goods, demerit goods and information failure A merit good is a good that has positive side effects associated with it.
Demerit good: one that has adverse side effects when consumed. Governments tend to provide merit goods, since there is likely to be underproduction and underconsumption; with demerit goods there is likely to be overproduction and overconsumption largely because these are goods that are habit-forming, relatively cheap and readily available. To understand these types of good, it is necessary to appreciate that there is information failure to the consumer. This arises because consumers do not perceive quite how good or bad a particular product is for them: either they do not have the right information or they simply lack some relevant information.
Moral hazard can best be explained in the context of the health care market. Why does anyone go to a doctor? The most usual reason is because we are not sure how to deal with a health problem, whether this is something trivial like a sore throat or something more serious. We visit the doctor to get information – in doing this we recognise that the doctor is better informed than we are and that the whole point about making this visit is to accept the advice that is given. Moral hazard is when some person in the market (in this case the doctor) is better informed than those seeking advice.
Cambridge International AS and A Level Economics Coursebook by Colin Bamford, Susan Grant
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