Anwar Hussain (ID No. 000718551-0)(BA) Business EconomicsEconomics 1006, Introduction to Economics For Business
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ECON1006: Intro to Economics for Busines
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000718551 Anwar Hussain
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Supply and demandThe UK government has recently introduced a minimum price scheme for alcohol. Discuss the likely economic effects using correctly labelled supply and demand diagrams to explain and illustrate your answer.The alcohol industry has revived strongly in many countries around the world in recent years including the UK and other European countries. Although Alcohol profits in other countries remain on average far below western European levels, they have been catching up rapidly, with sustained real annual increases in the double-digit range not uncommon. Alcohol minimum pricing is a new policy where there is a minimum price set for a specific unit of alcohol, below which it cannot be sold. By introducing a minimum price per unit of alcohol, drinks with a high number of units which are currently being sold at low prices, they will see the greatest change in price. A lot of frequent questions will be raised are to why there a legislation to introduce a minimum unit price is been passed. Firstly Minimum pricing is being taken forward as a legislation as part of a wider framework to rebalance the UK's relationship with alcohol. The UK government considers minimum pricing on alcohol to be an effective way to reduce the relationship and the consumption and most importantly to reduce the related harm that it has on the youth as well as the elderly, additionally its put into action because it believes that there is decisive action needed to address the affordability of alcohol is required. Another major effect of minimum pricing is that it focuses on the youth as because alcohol abuse in adolescence appears to be associated with alcohol problems later in life. Alcohol without any doubt what so ever is known as a Demerit good, this is because it can harm an individual's body. Alcohol is a good with negative utility or at least lower utility than consumer believes for example consuming alcohol can cause personal health problems, consuming alcohol can also cause costs to other people (external costs), such as increased levels of crime and cost of treating disease etc. However in some cases a...