National parks are the area set up by the national government for the betterment of the environment. In this case, the government wants to protect the environment for the preservation of the national park. Fees have become an important source of revenue and these fees are used to recreate the opportunity, to improve the visitor experience.
In the above-mentioned case, the demand is high. If there is an increase in demand than the increase in supply then the equilibrium price will rise (Hamdouch and Ghoudi, 2020). Considering the case of National Park, the demand is high as compared to the operational capacity of the park. The parks are operating below their potential.
There is an inverse relationship between demand and supply and prices of goods and services. If there is an increase in the supply of goods and services, the price will fall to a lower equilibrium price and higher equilibrium of goods and services. If there is a decrease in the supply of goods and services then price tends to rise to a higher equilibrium price and lower quantity of goods and services (Kowal, Conforti, Hergt and Marquardt, 2017).
In the above scenarios, there is deadweight loss. It can be stated as loss which can be from economic efficiency when the optimum level of demand and supply cannot be achieved (Zacharias and Williams, 2001).
In this diagram demand and supply are intersecting at equilibrium . The cost of entry into the park is 30 dollars. Above the equilibrium, deadweight loss is shown. Where demand and supply intersect each other it is known as equilibrium. This situation states that demand and supply are not in equilibrium. The park fees created a loss in this care as demand is high as compared to the supply as clearly shown in the diagram. In the diagram, the optimum level of achievement can not be achieved due to the inefficiency of the market. P means the price. Q means the quantity.
Answer 2 The New South Wales government introduced a Dine and discover package to support the local government The efficiency of the voucher under two different conditions can be :
A.In the first case as the takeaway has to be there for exactly 50$, it is going to support local business. It is also helping in developing employment opportunities which will boost up the economy. In this demand is going to Aggregate demand is going to increase which in turn affect the aggregate supply. Aggregate demand means the total amount of goods and services that the firm will purchase in the economy (Liu, Lamberton and Haws, 2015).
Aggregate supply means the goods and services that the firms are willing to sell at the price in the economy. The government aims to keep the economy flowing. To keep the local business growth, the package of 100$has been given out of which 50$ need to be spent on dining in the restaurant or take away. In case of the absence of a food voucher, he going to spend entirely from his pocket. The indifference curve moves towards outwards and the effect of the food voucher is similar to increasing the budget as in the case of cash grants. A cash grant is an amount that has been given by the government to an individual or an organisation for a particular purpose or to enhance some business also (Sepulveda and Mendez, 2005).
In the above diagram the indifference curve is moving in the outward direction.
B. In this case as Crusoe orders a takeaway worth rs $70 and pays $20 from his pocket. In this case, the cost is going to increase as the gift voucher for $50 has been given the additional $20 has been paid by him. In this case, he is spending 70$in which he needs to pay 20$from his pocket. He is spending more in terms of food items. He will have more utility in terms of food items. Food vouchers are opposed to cash grants as it increases consumption and reduce the choice of his consumption.
Australian Prime Minister Scott Morrison has announced to reduce the tax rates to 32.5% by 37% from July 2024. In the case of the low marginal tax rate, the tax revenue in the economy gets increases. This is the result of the fast growth of the economy. The effect of change of marginal tax rate on the economy is to ensure economic growth, to secure long-run fiscal sustainability. The marginal tax rate depends upon the taxable income of each financial year (Sanz-Sanz, 2019).
Australia has a progressive tax system which means that as you earn more, you have to pay high tax (Dagan, 2014).
For example, If our taxable income was $50000 in 2020/21 then the marginal rate tax will be 32.5% on every dollar $45000.
Marginal tax rate: Change in tax
Change in income
It is going to affect the level of investment opportunity which is going to increase the economy.
An increase in capital investment increases the employment opportunity in the economy.
If taxable income is between $18201, and $ 45000 then the marginal rate tax would be 19%.If taxable income is between $45001 and $120000 then the marginal rate will be 32.5%.
Effective tax rate: Total tax expenses
Effective tax rate presents the percentage of taxable income that is paid by the individual in the form of taxes. The effective tax rate is a more accurate presentation of a person overall tax liability than their marginal tax rate (Fischer, Rupert and Wartick, 2001).
Countries having high tax payers increases higher industrial growth and employment opportunities (Niknamian, 2021).
Annual income has been given on the x-axis .4.5%of 4000000 has been given. The taxable income will be 18000. In the case of higher tax, it leads to a higher amount of aggregate amount. It helps to create more employment opportunities which in turn increase industrial growth. In an economy, if capital is available then employment opportunities and industrial growth can take place hand in hand (Chansarn, 2010).
I do agree with the above statement. The reasons are stated below
- Enhance the production equates to Investment in education play a very important role as education is very important for the higher growth of an economy. If the government is planning, to invest more in higher education it is going to result in the better economic growth of the country. Education plays a very crucial role in the growth of the country. In the modern era, the country needs to invest in STEM. STEM means investing in science, technology, engineering and maths so that the technical productivity of an economy can rise (Chansarn, 2010).
Government investment in technology help in higher productivity. Higher investment in technology results in higher earning capacity of an individual which enhance the economic growth of the country. The technical skill of individuals helps to produce more productive resources that can be more beneficial (Yu, Zhao, Xu and Wang, 2014).
Technology plays a significant role in enhancing production. A technically educated person is an asset for the economy as he can do the innovation, experiments which can increase the production capacity of an economy. It helps people in gaining more skills while performing their work. It increases the earning capacity of an individual, which helps in creating a better prospectus for the future economy. Nowadays, Government invests more in technology as it plays a significant role in upgrading the economy. An investment in higher technology helps in increasing the production and GDP of an economy. Improve in the productive capacity of an economy results in a better perspective in the economy (Yang, Cheng, Chi and Huang, 2016).
Improves the standard of living and social status. Increase in the productivity skill increases the earning capacity of an individual. Increases in income on the other hand increase the spending of the people. Technology helps in better communication, production etc. It has made human life more comfortable, luxurious and easy. Advance technology improves the working condition of the country and increases the productive capacity which results in a better economic and social condition (Mason, Rincon-Aznar and Venturini, 2019). Standard of living and social status play a very important role in human life. A higher income helps in maintaining a higher standard of living. STEM education is necessary for the economic betterment of the country and job creation. In developing country its focus on the challenges faced by the people. Technical knowledge helps in enhancing the earning potential of an individual. It helps in the creation of innovators which in turn helps in creating more jobs. Technical knowledge plays a very significant role in developing a high standard of living, in achieving a better standard of life and at last in maintaining social status. As innovation takes place the economic development also takes place. The role of STEM in developing the economy is important as the country is dependent on new developments and ideas from the technological aspect (Briand, 2006).
Economic regulations means the regulations controlled by the government. A natural monopoly is a challenge for an economy. In these types of monopolies, the average cost is diminishing above the production as it needs to satisfy the market condition or demand (Sepulveda and Mendez, 2005). Services like electricity, railways are the traditional examples of natural monopoly. A natural monopoly can increase its profit by increasing its marginal revenue. In this, the firm has to perform according to the demand of the economy. In this type of market, the demand curve is downward sloping as the demand is inelastic. In this type of market, if the price is high, supply is low. In the case of an unregulated market, natural monopolies can produce and charge accordingly (Yang, Cheng, Chi and Huang, 2016).
Government ownership and production is a socially desirable alternative as the price is very near to average cost or marginal cost (Briand, 2006). It is socially desirable as the price can not be too high as compared to other market conditions like monopolistic competition. The main aim of the socially desirable is that maximum consumers should take advantage of the benefits. In this scenario the deadweight loss reduces. The other reason can be that this service should be affordable for the consumers (Liu, Lamberton and Haws, 2015).
The above diagram shows the marginal revenue curve is downward sloping. Marginal cost is the cost that is the change in the cost per unit change in output. P means the price. Q refers to quantity.AC means average cost. It is defined as the per-unit cost of output.
In today’s world, there are different features of the health care sector. It may be due to a lack of perfect knowledge about health care centres. Information asymmetry problems of moral hazards mean giving improper guidance regarding the product (Al-Ali and Abu Ibaid, 2015). In simple language, it means misleading or misguided information. Sometimes even the information’s presents in the wrong manner. This type of instance generally takes place in health centres like a hospital. In certain cases, concerning the treatment of the patient the hospitals are not able to cure the patient (Briand, 2006).
Adverse selection means when the sellers have more knowledge or information about the products. This type of selection is more visible in health insurance, life insurance etc. This kind of selection occurs in the case of asymmetric information which means failure of information. In this one party is having more potential knowledge than the other party (Chansarn, 2010). In other words, the seller has more knowledge than the buyer concerning the economic transaction. Most economic transactions have asymmetric information. In some cases, the seller even can take advantage of the buyer for their motive. We can state that sometimes the seller can even exploit the buyer. For example, A salesman can misguide the customer in case of a second motorbike sale. He knows the defect of the bike like improper functioning of the bike but in turn, he misguides the consumer regarding the performance of the vehicle (Kowal, Conforti, Hergt and Marquardt, 2017).
Most of the asymmetry problems of moral hazards and adverse selection are found in the database like death rate, infant mortality rates. In the present scenario, we can also refer to the example of the corona case (Liu, Lamberton and Haws, 2015).
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