People will consider the bad effects caused by demerit goods before purchasing or reduce the consumption on such goods that means private demand curve will shift to right. On the other hand, the supply curve shifts to left because of the costs of bad effects added to the factor costs of the products. The transaction of that goods decreases. After government applying negative advertising to public, the total transaction will decrease again because demand decreases. According to the diagram above, the quantity transferred in the market drops from qp to qs first, and then, to qt.
- During deflation the price of goods and services continue to fall and during that consumers will tend to delay their purchases hoping that prices may fall further. This is dangerous as this will lead to lower production, lower wages, and decline in demand and thus, consequently lead to further decrease in prices. This is known as deflationary spiral. What is Deflationary Spiral? - It is a situation when decrease in the prices leads to lower production, lower wages and demand, which can lead to further decrease in the prices.
The decrease in demand is a major problem for Malawi, a country that is not market orientated or market aware. Decline in demand for cigarettes will obviously have a direct effect on demand for tobacco because they are complimentary products. With decreased demand for its crops of tobacco, Malawi will find itself in a very dangerous situation that will not only threaten its economic position but the very lives of its population. Another concern that Malawi must take into account is the state of the tobacco industry. At present the market could be described as an oligopoly (see appendix) where suppliers compete on price.
Tobacco companies argue that tobacco industry play an important role in national’s economy, therefore if all public relation activities related to tobacco products will be banned completely, the tobacco industry might be economically harmed by the bans such as the possibility of bankruptcy if there is a decrease in their profit, which led to massive unemployment. Then, bans on tobacco advertisement, promotion and sponsorship will lessen government burden in economic. Compare to economic loss or healthcare cost as a result of tobacco use, these loss is much higher that revenue which government received from tobacco excise, which only reached IDR 103.53 trillion 2013 (Research and Health Development Body 2014). Lastly, it will affect citizens’ behaviour by discouraging them to buy smoke. In addition, government position seems unwillingly or in dilemma position to enact a strict policy such as imposing all tobacco advertisement, promotion and sponsorship because potential benefits which might loss if harsh policy will be implemented in
The quantity equilibrium where the economy is currently producing at is greater than the social optimal level which depicts coal being misallocated. The socially optimal level where MSC=MSB, which is represented on the graph by Pso and Qso is the point where output from the production of the coal is lower, which would lead to less pollution overall. The coal polluting industry imposes a cost to the society that isn’t paid for by the polluting firm which illustrates market failure. These external costs to society include lung disease and cancer rates increasing among the population ultimately increasing social costs that exceed the private costs of producing coal. Furthermore, there is a loss of total welfare in the industry as shown on th... ... middle of paper ... ...optimal level.
It’s a possibility that tobacco companies are to make a riot, by making statements such as tax revenue is not the dependable source of revenue, and increasing tax will only inspire smuggling. If poor people are the ones who’ll quit the habit of smoking, so much better for them as they’ll benefit a better quality of life, but there will be a raise in the cost of Social security as there are healthier individuals who are likely to live longer, and hat would result in more retirees. This article can be analyzed in an economical point of view and who it’ll effect, whether the buyer or seller, and the incidence of tax, in which who will bear the tax. With New York being the highest taxpayers, paying $4.35 per pack (Tax.ny.gov, 2014), the main intention of any state that applies taxes on cigarettes is to cut down the quantity being sold. Now why is this important?
This lowered level of disposable income leads to a decrease in consumption spending as well as a decrease in savings. This decrease in consumer and government spending causes the total spending to decrease by a multiplied amount, As a result of the decrease in total spending the aggregate demand decreases and the aggregate demand curve shifts to the left. This decrease in consumer and government spending also causes businesses to have a surplus of inventories. At this point the output is greater than spending and as a result prices begin to fall. Because of the surplus of goods and falling prices consumption becomes more desirable to consumers and the level of consumer spending rises.
Smoking has became a major issue everywhere in the world. The effects of cigarette smoking can be really terrifying as smoking is dangerous not only to those who smoke but as well as the non-smokers. Tobacco from a cigarette contains nicotine, which is a highly addictive drug that makes it difficult for the smokers to stop smoking. (MentalHelp, 2005). They are not only physically addicted to nicotine but they also link smoking with many social activities which makes it hard to stop (American Lung Association, 2014).
During our existence as human beings, we have altered our ways of living in society. The act of smoking can have detrimental effect in a person’s social, emotional, physical life and can lead a person into the state of depression or insecurity. The repercussions are beyond wildest dreams and will change a beings life eternally. At the age of 9, my grandfather had passed away with lung cancer due to the over use of cigarettes. Years of frustration had haunted him down till the day of his death and with that affected his loved ones.
Some notable arguments placed in favor of the ban are as follows: 1. Concerns related to public health: Smoking is injurious to health and advertising helps to promote this habit in young adults. 2. Increase in employment: Contrary to the popular belief, a study (SSA, 1997) showed that reduction in smoking leads to the circulation of money in more labor intensive sections of the society 3. Reduction in Consumption: World Bank (1999) report showed that there was a steep decrease in consumption with a ban on advertisement of tobacco products.