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Riddhi.
Indirect tax may not be the best way to tackle the problem of overconsumption of alcohol. This is due to the fact that alcohol is a fairly inelastic product, this means that a tax will

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Alcohol is a demerit good. This means it is over consumed and over produced when left to the free market, this is an example of market failure. To correct this, the government intervenes. When left to the free market only the private benefits are accounted for when consuming alcohol. However if the external benefits were also considered, the marginal social benefits would be lower then the private benefits alone. Examples of the negative externalities of consuming alcohol include: vandalising property, injuring oneself or others effecting the NHS and being restricted from driving due to slower reactions and increased confidence. When left to the free market equilibrium is at PQ, when the government intervene through methods such as increasing indirect tax, which would increase cost of production for suppliers causing supply to decrease. Another method the government intervenes is information provision; people will be educated about the negative effects of alcohol through school and marketing. This will decrease quantity demanded to Q1 which shows a correction of market failure.  P1Q1 shows the social optimum equilibrium. The increase of tax by the government can be put towards the NHS or the Education sector which will benefit society further. Furthermore, the reduction in consumption of alcohol will reduce the number of people requiring the NHS for reasoned such as Alcohol poisoning or injuries incurred due to drinking! This will save the NHS money and resources allowing them to use these resources for other people who may require these services more! This is why taxation and information provision are very effective methods of government intervention. On the other hand, government failure could occur due to austerity, so the government may not invest in educating further about the negative effects of alcohol consumption. Also because alcohol is inelastic demand because it is habit forming, taxation may not be as effective.

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Joe

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AHMED

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Alcohol is a demerit good in which the social costs are greater than the the private costs faced by the consumer. If left to the market alcohol would be over -consumed and over-produced because of consumers being unaware of of the external costs caused by the consumption of alcohol. Private costs which are the costs to to consumers would include liver failure. The social costs would be the the increase of pressure on the NHS to treat its ill patients. This would also have an effect on 3rd party individuals who would have an increase in costs imposed on them through taxes to care for the individuals of alcohol related diseases. This over-consumption or over-production of alcohol may have been caused by information failure which is a type of market failure where both individuals and firms lack information about economics decisions. The market failure of alcohol may have also been caused by government failure where the government intervention fails to correct the market failure. For example not imposing a heavy enough tax that would be effective on the over-consumption of alcohol. Indirect tax is the price paid to the government by suppliers that is passed on to consumers as part of the price of a good or service. If the indirect tax is significantly increased by the government this could be a successful intervention causing the over-consumption of alcohol to plummet. This is because he increase in indirect tax would mean that the cost production increases therefore causing a decrease in supply from s to s1. This would therefore be a successful government intervention as there would be less special offers as suppliers would be less able to sell alcohol less than the cost of producing alcohol. A reason why this could fail is because of how alcohol is inelastic  as its habit forming however a fall in demander from d to d1 would also occur due to the increase in indirect tax causing the overall price of alcohol increase inwhich  some would be less able to purchase the good

This form of government intervention may also be successful due to previous interventions such as the sugar tax.

Ahmed.

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Zainab

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Krishnan Hanna - 25 Marker First Paragraph.

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Krishnan Hanna - 25 Marker First Paragraph.

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Looking for one quality paragraph that includes:
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