The Market Education - Assignment Example

The market education: Museums Introduction A market can be described as a place, which provides an opportunityto purchasers and sellers to engage in an exchange of various goods and services. In any market, there is information gathering by the buyers and sellers. This is important in helping to remain informed about the major aspects influencing different forces in the market. A market also plays the role of price control. This includes ensuring stable prices for commodities and services. Furthermore, this can be achieved when there is a balance between supply and demand in the market. Nonetheless, this paper focuses on museums, in the context of a market, and explores how museums and museum visits satisfy the various aspects of a market economy and economics. 2. Markets, Demand, and Supply The market plays a major role in ensuring that the force of demand is equivalent to that of supply. In the case of museums, museum visits represent demand, while the number of available museums and museum services represent the supply. In a market, there is the aspect of price mechanism, which involves an interaction between the buyers and sellers, in order to determine the market price. Nonetheless, the market price is determined by the supply and demand in the market. Therefore, when prices rise, the demand falls, and when the prices fall, the demand rises. On the other hand, the market equilibrium price is achieved when there is a balance between the force of supply and that of demand. In this case, there results a balance in production and consumption of goods and services. Prices in a market economy can act as an incentive to entice buyers to purchase more goods. Therefore, when prices are lowered, this acts an incentive, as consumers will be able to purchase larger quantities of goods and services. In the case of museums, the entry fee is the price, which visitors pay for viewing various things in the museum or utilizing various services therein. Therefore, when the entry fee is high, there will be fewer visitors in museums; while many people will visit museums when the entry fee is low. The entry fee to museums can therefore, act as an incentive, when it is lowered, or when it is lifted. For instance, in England, most free museums register higher museum visits, as compared to paid museums (Museums Association Web). Nonetheless, the entry fee to museums might be determined, depending on the level of demand. Therefore, at peak periods, when there are many tourists and domestic visitors, museums will increase their entry fees. 3. Museum Visits and Demographic Demand Pattern A demographic demand pattern for museum visits mainly depends on various aspects. First, the type of museum determines the type of visitors visiting it. Additionally, the season also influences the nature of visits and types of visitors. For instance, Art museums might have many visitors, who are older, while science centers might receive visits from younger visitors. Furthermore, like art museums, historic sites and history museums might have older visitors. On the other hand, children museums are known to have the youngest visitors, as compared to art museums, history museums, and science centers (Museum Audience Insight Web). 4. Shifts in Demand and Supply in Museum Visits Demand and supply with regard to museums is influenced by different factors. First, the national economy influences both the demand and supply of museum visits. During periods of recession, the amount of museum visits will decrease considerably (American Alliance of Museums Web). This is because, the purchasing power of consumers decrease, thus their spending on leisure and culture also decreases. The second aspect is that of entry or admission fee to museums. When the entry fee is increased, the demand will go down, but when the entry fee is lowered, the demand will increase, thus more museum visits. It can also be argued that the interest of people in their culture influences the demand in this market. The more interested people are in culture, the higher the demand, while less interest in culture lowers the demand, thus decreased museum visits. Finally, the quality of the public service in museums also plays a role in determining demand. When visitors are satisfied with the service they are accorded in museums, they will visit more, thus increasing the demand. On the other hand, poor services will lead to low demand, as more visitors will stop visiting the museums. Therefore, in this case, during the peak of museum visits, museums will create more services to accommodate the increased number of visitors. 5. Elasticity It is important to have an understanding of the elasticity of cultural demand, in order to determine the entry fee or price of admission at museums. According to Pawlowski and Pawlowski, demand elasticities refer to the “non-dimensional measures that indicate the sensitivity of demand to variations in a particular economic and non-economic factor” (1). Nonetheless, price, cross price, and income elasticity are other factors that are critical in analyzing demand. Nonetheless, depending on cultural or leisure demand, museums might decide on charging admission fee or not to charge. The total income of museums depend on the elasticity of demand. Therefore, inelastic demand for museum visits will lead to high admission fee, thus higher income for museums. On the contrary, elastic demand for museum visits will lead to lower entry fee, thus lower income for museums. On the other hand, cross price elasticity refers to the rate of response for demand, due to price change or a substitute good (Pawlowski and Pawlowski 7). In this case, I would like to consider cinemas as an example of museum substitutes. Therefore, it is possible to argue that high museum entry fee will raise the demand for cinemas. Nonetheless, in the case of the UK, if museums granted free entry, this would lead to an increase in museum visits, as compared to visits to the substitutes of museums, such as cinemas. Additionally, families will spend less, and save more, with regard to museum expenditure. Although this would increase the household income considerably, the national economy might be injured. 6. Market Failures When price mechanism collapses, a market failure will result. When this happens, it becomes impossible to allocate resources effectively within the market. Different factors might lead to market failure, including the development of monopolies. With regard to museums, market failure might arise when the aspect of monopoly is present. In this case, museums might be left as a government concern, and the private sector might be prohibited from developing museums. In this case, the available museums will be few, and might not satisfy the needs of all visitors, thus leading to economic ineffectiveness. In addition, when museums services are not considered under the category of merit goods, a market failure might occur. In this case, therefore, most people under-consume museum services, therefore, if these services are overcharged, this will attract fewer people. This is mainly because; the public might not value museum services in the monetary terms, even though this leads to increased knowledge. 7. Government Intervention Government intervention is needed, in order to rectify market failures. In the case of museums, the government might choose to correct monopolization through the introduction of the aspect of taxing the monopoly profits. In addition, the government might introduce the aspect of controlling prices in the market. In the case of museums, the government might be the one responsible for setting the museum entry fees, instead of the museums. In this case, the government will control the entry in such a way that it does not lead to further market failures. Finally, in the case of museums, the government might intervene by lifting the entry fee, so that visitors get access to museums without making any payment. All these intervention strategies will ensure that there is an equal distribution of goods and services in the market. 8. Effect of Government Demand on Demand for Museum Visits The mentioned government intervention options will have different effects on the demand in museums. Most importantly is that, these government interventions will lead to increased demand, as more people will want to visit museums. However, a major limitation is that these interventions will be costly for the government to implement, and might have a negative impact on the economy. This is because, museums will register little or no returns, and all the cost of maintaining them will be draw from the public funds. 9. Recommendation A major recommendation is that the government should invest in educating the public on the importance of museums. This includes educating people on the role museums play in the national economy. Museums are a key driver of the national economy, as these provide employment to a large number of people, and they also contribute a significant amount of finances to the national economy through visitor spending. For these and other reasons, the government should educate the public, and urge people to promote museums by visiting them more often. This should be in a bid to remove the possibilities of lifting the entry fees to museums, as this might impact negatively on the economy. The government should also invest in the promotion of its country’s culture and diversity abroad. By displaying this to the international fraternity, more people would be interested in visiting, thus increasing the visitor base of museums. This is important, as through this, the national economy will benefit, and the museums too will obtain profits through the entry fee charged on visitors. Works Cited American Alliance of Museums. “Museum Facts.” n.d. Web. Accessed 15 November, 2013 < http://aam-us.org/about-museums/museum-facts> Museums Association. “Facts and Figures.” n.d. Web. Accessed 15 November 2013 < http://www.museumsassociation.org/download?id=165106 > Museum Audience Insight. “Who's Coming to Your Museum? Demographics by Museum Type.” April 21, 2010. Web. Accessed 15 November, 2013 < http://reachadvisors.typepad.com/museum_audience_insight/2010/04/whos-coming-to-your-museum-demographics-by-museum-type.html > Pawlowski Tim and Pawlowski Christoph. “Expenditure Elasticities of the Demand for Leisure Services.” PDF. Accessed 15 November, 2013 < http://college.holycross.edu/RePEc/spe/PawlowskiBreuer_LeisureElasticities.pdf> Read More