Economics for Business Executive Summary- The Concept of Public Goods

Economics for Business Executive summary- This report will include the concept of different types of goods such as public goods, quasi-public goods, and private goods. Introduction 4 MAIN BODY4 TASK 14 Public, Quasi and private goods4 Issues faced by UK government related to public and quasi-public goods 6 TASK 27 Merit and demerit goods7 Policies and funding's used for improving access to merit goods 8 Evaluation- 9 CONCLUSION 10 REFERENCES 11 .

Economics for
Business
1

Executive summary- This report will include the concept of different types of goods such as
public goods, quasi-public goods, and private goods. It will include a theory of imperfect
competition in which an organisation that they can influence the price of their products. Other
than this it was analysis that the government of UK will provide or offer public goods. Other
than this it will define the concept of merit and demerit goods, with the help of an appropriate
example. It was analysis that the government of UK will take various measures or intervention
which will help them in increasing the consumption of merit goods and reduce the consumption
of demerit good. Government will take various steps for promoting merit goods such as they will
provide subsidies and NHS will provide low cost healthcare facility. While on the other hand the
government of UK will increase the tax rate on demerits goods so that the consumption of these
goods will reduce and also reduce its impact on society.
2

Table of Contents
Introduction......................................................................................................................................4
MAIN BODY...................................................................................................................................4
TASK 1............................................................................................................................................4
Public, Quasi and private goods.............................................................................................4
Issues faced by UK government related to public and quasi-public goods............................6
TASK 2............................................................................................................................................7
Merit and demerit goods.........................................................................................................7
Policies and funding’s used for improving access to merit goods.........................................8
Evaluation-.............................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
3

Introduction
Main objective of this report is to better understand the concept of economics for
business. It was analysis that economic is related to business because it will assist in analysing
the international financial conditions influence businesses. Business economics will assist in
establishing a good relationship between different economic factors, such as income, profit,
losses and structure of market (Gabryelczyk and Roztocki, 2018). This will help in guiding the
managers in effective decision making & assist in effectively running organisation. Main focus
of this report is on differentiating between private goods, public goods and quasi-public goods.
Other than this it will focus on the merit and demerit goods which will assist in analysing the
positive and negative impact on the society. The government of UK will take various steps for
control the access to these goods. This report will include theories from Krugman which will
help in better understand the concept of public, quasi-public and private goods. It will include
various policies used by UK government for improving the access to merit goods and discourage
the access to demerit goods. Other than this it will include the positive and negative impact of
merits & demerits goods in the UK society.
MAIN BODY
TASK 1
Public, Quasi and private goods
1)Public good are regarded as commodity or services that are made available to all members of
the society. In context of UK administration it includes law enforcement, rule of law and
National defence. Public goods are also regarded as more basic goods that include clean air or
drinking water (Private, Public and Free Goods defined, 2020).
Quasi public goods possess characteristics of both public and private goods that include partial
excuse ability partial diminish ability partial rivalry and partial rejectability. It includes bridges,
tunnels, roads markets of these goods are considered as incomplete. Lack of provision by free
market can be considered in efficient or market failure.
Private goods: In UK private goods are regarded as those the owners of which are restricted to
individual or group that are purchased for their own consumption. Private goods are not shared
with anybody is they are related with transferring rights for using it or consuming it. It includes
4

excludability and rivalry related aspects. United Kingdom these goods are provided in a free
market where organisation can make profit from them
The offering of required products by government to customers is often associated with different
theories that are related and developed by Krugman and wells textbooks. There is a theory of
imperfect competition where organisations are aware that they can influence the prices of
products and they can only sell by reducing the prices. In perfect competition, it is characterized
by industries where there are few major producers. Each major producer is observed by
customers as strongly differentiated from the rival organisations. It can include government
under the circumstances each organisation is viewed as a price setter that is choosing the price of
product rather than price taker. In UK, some of the specific products and services are regarded as
a pure Monopoly of government. In this they are facing no competition the overall supply can be
increased or decreased by the government as per their discretion as well as presence of relevant
circumstances (Paul Krugman: Theory in Service of Economic Policy, 2020).
Example: Example In year 2018, the UK economic growth was weakest since year 2012 because
of brexit and other global worries. GDP in the last three months of the year 2018 was very slow
with the manufacturing of Steel products and cars that led to steep fall in the construction.
Britain’s economy slowed down as the expectation of the final three months in the year 2018 that
lead to weakest growth in 6 years. In this year government had to deal with the slowest growth
these were two major issue of government not being able to provide certain necessary private
goods. Figures clearly depicted a goods trade deficit that was at 12.1 billion pounds. There was
falling of housing investment and there was stagnating decline in the economic productivity of
the country (UK 2018 economic growth weakest since 2012, as Brexit and global worries weigh,
2021).
Government should offer public goods: Every individual has a right to access public goods
because it is related with equal right for having accessibility to such goods. The use of public
good by one person does not diminish it from another ability to enjoy it. Public statistics
National defence and findings of scientific research on laws of nature are examples of code
public goods. In UK There are several other goods that resemble public goods that are regarded
as causing public goods. These are very essential for the daily living of individual it includes
5

telecommunication infrastructure stable, soil, clean water, major transportation, public parks and
flood control facilities (Mutalimov, and et. al. 2020).
Issues faced by UK government related to public and quasi-public goods
In UK government is facing some of the issues in the process of providing sufficient access to
public and Quasi public goods. The main difficulty may arise because buyers are not directly
paying for public goods and neither the sellers are providing them because they are receiving
nothing for the provision. So, there are instances of market failure by private markets in
allocation of resources to produce the specific public goods in UK.
In UK, there are certain welfare programs that are very helpful for the purpose of offering fair
access to public and Quasi public goods. There is offering of many different welfare benefits to
families and individuals who are in need. In context of disabled unemployed caring for a relative
or low income there are many numerous benefits that are offered by the government to
struggling people to pay for their living expenses and housing facilities. All these efforts from
government are contributing towards fair access to public goods and Quasi public quotes
(Welfare Programmes in UK, 2018).
UK social welfare programs provide a direct link with the fair access to cause the public and
public goods. Recently in the year 2018 April government has launched social insurance screen
where 12% of weekly earnings ranging from 157 pounds to 866 pounds + 2% of weekly earnings
greater than 866 pounds will be offered with social insurance facility.
Example: for instance there are emergency benefits that are offered. The United Kingdom is a
unitary state where Central Government direct the government activities. Structure of services in
Wales Scotland and Northern Ireland are different in certain aspects.
But in the year 2021 it is estimated that 37 billion pounds will be less spent on working age and
social security as compared to year 2010. The major cuts have been made in personal
independence payments and employment support alliance that has led to shrunk by nearly 5
billion pounds or 10 % since the starting of decade. This situation in United Kingdom has
resulted into difficulty in some of the Quasi public goods accessibility to people. Majority of the
families are unable to cloths their children properly. There are you directions in benefit spending
where cost have increased for poorest families leading them using a disproportionately high
share of income on food fuel housing and child care (Old Age, Disability, and Survivors 2020).
6

TASK 2
Merit and demerit goods
Krugman is a Neo-Keynesian writer and economist from United State, who is well known
for their work on trade issue & international economics. It was analysis that he will develop its
new trade theory as an alternation of their previous trade theory. This theory will explain the
pattern of international trade on the basis of endowments of natural resources & competitive
advantage factors. It will explain the trade theory in the modern concept on the bases of
customers preferences and brand of a product and service. On the bases of Krugman and Wells
the merits and demerits foods in UK market is mention below (The Investopedia team, 2020)
Merits goods- It refers to those goods and services for which the government of a
country will feel that people will under-consume or provide free at a point. It was analysis that
government will take various steps for promoting the consumptions of these goods. This type of
goods are also called as superior goods. This type of goods and services are promoted by the
government of a country. It was analysis that the government want that the consumption of these
good will increase so that the welfare of the society will also increase. For example- Public
library, public parks, hospitals and schools and so on
Example of merit goods and their positive impact on society (Merit and non-merit goods:
Meaning, differences and example, 2021).
Education and healthcare are the best example of merit goods which will create positive
impact in the society of UK. It was analysis that consumption of these goods will create a
positive impact on the society. It was understand that the most efficient utilisation of resources in
the production of these type of goods will depend on the quality is equal to the marginal social
benefit with marginal social cost. It was analysis that these goods will have a positive impact on
the society of UK, as it will assist in the growth and development of people and promote a better
standard of living (Mutalimov, and et. al. 2020).
Demerit goods- It refers to the kinds of goods which are bans by the government because it
will seem harmful for the society. For example- High Caffeine energy rinks, Alcohol, Tobacco
products etc. These goods will have a negative impact because they will affect other without
compensating them. Generally these goods re too costly because government will impose higher
taxes on the demerit goods.
Example of demerit good and their negative impact on society
7

When a driver will consume excessive alcohol and then crashes into an innocent driver
will damage the vehicle and also both the parties are injure. It will define that a negative
consumption has arisen. It was analysis that the society will also suffer because the actual benefit
of drinking by driver will reduce the benefits to other. This will reduce the marginal social
benefit and cause to a negative effect on other.
Policies and funding’s used for improving access to merit goods
The government of UK will use various policies and funding’s for promoting the
consumption of merit goods. Such as they will provide subsidies to their people so that they will
increase the consumption of merit goods. The government of UK will also provide low cost
educational and hospital service which will assist them in to promote the consumption of merits
goods.
For example- Healthcare is consider as an merit goods because it’s consumption will benefit to
other as well as the individual consumer. NHS is a good example which will promote the
consumption of merit goods. It will provide healthcare facility to people at a very low cost. It
will also provide employment to more than 1.7 million people. For its funding the government of
UK will use the tax revenue of government is used as the source of funding’s (Healthcare as a
merit good, 2021).
Policies which reduce access to demerit goods
It was analysis that there are various remedies which are used by the government of UK
for reducing the impact of demerits goods. Such as by imposing high taxes and fines for over
consumption of these goods. Other than this by controlling the supply of these products through
licencing system (Raza, Shah, and Arif, 2019).
For example- The UK government will increase the tax rate on alcohol and other demerit
good which will increase the price of these products. It will reduce the consumption of these
goods along with this government ill ban the consumption of alcohol and citrates in the public
place so that the society will does not effect because of demerit consumption. These policies will
assist the UK government to create a sound economics and provide better standard of living to
their people. It will also reduce the pay of government in healthcare in the future.
Evaluation-
From the above discussion it was analysis that UK government intervention will provide
a fair provision for merits goods. For example- the UK government will aims to reduce the
8

consumption of fast food because the government will analysis that it will only cause health
problems for their people. For this the government of UK will provide subsidies to reduce the
cost of purchasing for healthy foods, like fresh fruits and vegetables. It will help in reducing the
demand of fast food by cutting the cost of a healthier substitute. It will assist the government of
UK in reducing the health issues and also increase the wellbeing of the populace. But it was also
analysis that fast food are cheaper than healthy and organic foods and because of which the
customers are prefer to buy fast food. For this the government of UK is require to conduct an
effective campaign for attracting their people towards the healthy product and motivate them to
reduce the consumption of demerits goods. Other than this by providing subsidies on education
the government of UK will promote the merits goods in their country and increasing
consumption of merit good will increase the benefit to society and provide better standard of
living.
9

CONCLUSION
From above discussion on this report various types of goods are analysis in this report.
Such as public goods are the commodities which are available to all members of the society.
While quasi-public goods are having the characteristic of both public and private good. It was
analysis that the private goods are not shared with anybody and purchase for their own
consumption. Other than this it was analyse that UK government will face some issues in the
process of providing access to public & quasi- public products. The concept of merit good and
demerit goods is analysis which will help in better understanding that merits goods will provide a
positive impact on the society on the other hand demerit goods will create a negative impact on
the society. It was conclude that government of UK will take various Interventions which will
assist them in promoting the consumption of merit goods and reduce the consumption of
demerits goods.
10

REFERENCES
Books & Journal
Gabryelczyk, R. and Roztocki, N., 2018. Business process management success framework for
transition economies. Information Systems Management. 35(3). pp.234-253.
Collinson, S., and et. al. 2020. International business. Pearson UK.
Mutalimov, V., and et. al. 2020. Methodology comprehensive assessment of the business
environment in the regions of Russia: introducing business environment into education
system. Journal of Entrepreneurship Education. 23(1). pp.1-14.
Raza, S.A., Shah, N. and Arif, I., 2019. Relationship between FDI and economic growth in the
presence of good governance system: Evidence from OECD Countries. Global Business Review.
p.0972150919833484.
Online
UK 2018 economic growth weakest since 2012, as Brexit and global worries weigh, 2021
[online], Available through<https://www.cnbc.com/2019/02/11/uk-2018-economic-growth-
weakest-since-2012.html>
Private, Public and Free Goods defined, 2020[online], Available through<
https://www.economicshelp.org/blog/2104/economics/private-public-and-free-goods-defined/>
Paul Krugman: Theory in Service of Economic Policy 2020[online], Available through<
https://www.cairn-int.info/article-E_LECO_041_0046--paul-krugman-theory-in-service.htm>
Introduction by Paul Krugman to The General Theory of Employment, Interest, and Money, by
John Maynard Keynes, 2020[online], Available
through<https://www.gc.cuny.edu/CUNY_GC/media/LISCenter/krugman-keynes-intro.>
Welfare Programmes in UK, 2018[online], Available
through<http://www.righttowork.org.uk/welfare-programmes/>
Old Age, Disability, and Survivors 2020 [online], Available
through<https://www.ssa.gov/policy/docs/progdesc/ssptw/2018-2019/europe/united-
kingdom.html>
The Investopedia team, 2020. [Online] Available through <
https://www.investopedia.com/terms/p/paul-krugman.asp>
Healthcare as a merit good, 2021. [Online] Available through <
https://www.economicsonline.co.uk/Market_failures/Healthcare.html>
11

Merit and non-merit goods: Meaning, differences and example, 2021. [Online] Available through
< https://www.jagranjosh.com/general-knowledge/meaning-and-examples-of-merit-and-non-
merit-goods-1554463908-1>
Merit goods, 2021. [Online] Available through <
https://www.economicsonline.co.uk/Definitions/Merit_good.html>
Demerit goods, 2021. [Online] Available through <
https://www.economicsonline.co.uk/Market_failures/Demerit_goods.html>
Sourav S., 2021. [Online] Available through < https://www.mytutor.co.uk/answers/27772/A-
Level/Economics/Choose-an-example-of-a-demerit-good-and-and-a-policy-which-may-be-used-
by-the-UK-Government-to-help-reduce-its-consumption/>
12