Public goods

1. non-excludable – no one can be excluded

2.Non-rival – your utilization will not affect the
utilization of next user

Rival Non-rival
Excludable Pizza Beautiful & non-
crowded park
Non-excludable Public hospital, Defence, street lights
public school

Electricity – excludable & non-rival

Health – non-excludable & rival
Street light – non-excludable& non-rival
Water supply – excludable & rival

Warning of health -> shift demand curve to left

Qdecrease

Average rate of tax = tax paid / Y

When Y1 -> Y2
% income increase > % tax paid
Y1 = 10, Y2 = 20; Income up by 100%
T1 = 10, T2 =15; Tax up by 50%
Time 1 => 10/10 =1
Time 2 => 15/20 = 0.75

Marginal rate of tax = the increase in tax

Ad-valorem tax = 10 % tax

Appreciation of RM -> cause export more

expensive, import cheaper -> D export decrease,
D import increase (D domestic goods decrease)
D domestic goods (C) decrease + D export
decrease -> aggregate demand decrease -> price
level down

Exchange rate appreciating ->

export price increase -> export revenue will go
down if PED elastic (as big as possible)
import price decrease -> import expenditure will
go up if PED elastic (as big as possible)