Question

Using what you learned about private and social costs as well as private and social benefits in private decisions-making, explain why managed isolation has been imposed on cross-border travellers and explain the economic consequences of not charging for managed isolation upon entry.

Answer 1

Private and social costs:

Private costs are the costs paid by firm OR consumers . It must be included in production and consumption decisions . Private costs to firm or individuals do not always equate with the total cost to society for a product , service OR activity . In a competitive market , Considering only the private costs will lead to a socially efficient rate of output only of there are no external costs .

• Social costs include both the private costs and any other external costs to society arising from the production or consumption of a good OR service . It is the sum of personal and external costs [ Social costs = Personal costs + External costs ] . Social costs is differ from private costs.

Private and social benefits in private decisions-making:

• Private benefit is the benefit derived by an individual OR firm directly involved in a transaction as either buyer OR seller . The private benefit to a consumer can be expressed at utlity , and the private benefit to a firm is profit . Private benefit can be contrasted with external benefit .
• Social benefit is the total benefit to society from producing OR consuming a good OR service . It includes all the private benefits plus any external benefits of production OR consumption . If a good has significant external benefits , Then the social benefits will be greater than the private benefit . Social benefits are private benefits gained by individuals directly involved in a transaction together with the external benefits gained by third parties not directly involved in the transaction.

Managed isolation has been imposed on cross-border travellers :

Managed isolation has been imposed on cross border travellers in now-a-days to stop the spread of Corona virus . Mnay countries , like Canada imposes mandatory self-isolation for cross border travelers . Many countries have made a small effort to stop Corona virus by imposing isolation for cross border travellers . Truck drivers and health care workers crossing the boarder are exempted from the quarantine act and Canada and the US alreday closed their common boarder for all non-essential travel.

Economic consequences of not charging for managed isolation upon entry:

All fisrt glance , The Government has done exactly what many over as kiwis feared : There will soon be a $3100 fee for the first person's two-week stay in managed isolation , With a $950 charge for each additional adult and $475 for each additional child . But a second look shows thats not really how the policy would work in partice . Some Economist said that , The Government needs to have regard for financial prudence in the face of higher debt stemming from the pandemic , and it doesn't want to be seen as providing everything for fee . The Economic consequences is very poor for not charging for managed isolation.