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ТОР 5 статей:

Методические подходы к анализу финансового состояния предприятия

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Служебные части речи. Предлог. Союз. Частицы

КАТЕГОРИИ:






Understanding main points of the text.




Mark these statements T (true) or F (false) according to the information in the text. Find the part of the text that gives the correct information.

1. Traditionally, there are six main causes of market failures.

2. The increase in competition tends to reduce the efficient use of scarce resources.

3. There is no competition when a monopolist dominates.

4. Adequate competition also may enable a business to influence politicians in order to get special treatment that enriches its managers and owners.

5. Availability of adequate information about market conditions leads to the efficient allocation of resources.

6. Everyone can see the effects of inadequate information immediately.

7. Resource immobility deals with factors of production.

8.Public goods are produced by private firms.

9. Public goods can be used by any consumer.

10. There are three types of externalities.

11. Externalities are market failures because their costs and benefits are reflected in the market prices that buyers and sellers pay.

 

Understanding details of the text.

1. What exactly do the authors mean speaking about a concept of “inadequate competition”?

2. Explain the meaning of “public goods” and “externalities”.

 

ACTIVITY 2

Dealing with externalities

Pre-reading task.

1. Use a graphic organizer like the one below to identify and describe both types of externalities.

 

  EXTERNALITIES    
Positive: Negative:
       

2. Identify a situation in your community that resulted in a negative externality. How would you advise the government to reduce these negative effects?

 

Now read the text “Dealing with externalities” and answer the following questions:

1. How can the government correct negative externalities?

2. If externalities are positive, why should they be corrected?

 

The problem with externalities is that they distort the decisions made by consumers and producers. Overall this makes the economy less efficient.

Correcting negative externalities.

A classic example of pollution sheds some light on the distortions caused by negative externalities. Firms historically located near rivers because transportation was convenient. However, the firms also used the rivers as a giant waste disposal system, which helped keep their production cost low. This led to lower market prices for the final product, and consumers were able to buy more. The negative externality of pollution generated several problems. Firms had the incentive to pollute because it was the most profitable way to produce. The low prices also encouraged more sales, and hence more pollution. Finally, people living downstream from the polluting firms were, in effect, paying for some of the production costs even if they did not necessarily buy the products. Suppose the government decided to force the firms to clean up their pollution by putting a $1 “pollution tax” on every unit of output sold. The tax would help alleviate pollution problems. First, all firms would have less incentive to pollute because the tax drivers up the price of their products. Second, higher prices would reduce the quantity demanded, so firms would produce less and therefore generate less pollution. Third, the people living downstream of the effected rivers would face less pollution.

Correcting Positive Externalities

Externalities can be positive as well as negative. Yet even when externalities are positive, so that uninvolved third parties experience beneficial side effects, distortions can occur. A classic example is education. We know that people generally earn more when they have more education. In addition, a community with well-educated workforce will attract more industry, have more economic development, and enjoy higher standard of living. For these and other reasons, it makes sense for the government to subsidize the cost of public education. This exactly what happens when local governments pay for the cost of primary and secondary public education. When it comes to the higher education offered by state universities, however, state governments only pay for part of the cost, leaving students to pick up the rest in the form of tuition payments. Given education’s value to the community, many experts feel that the government subsidies should be larger than they are. This is expensive, however, so government tends to underfund higher education even though more subsidies are warranted.

ACTIVITY 3






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