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Economic consequences of alcohol prohibition
History of use of alcohol in society
Economic consequences of alcohol prohibition
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2 Questions to address: a) What do we know about the demand for alcohol, and how is this relevant to policy makers wishing to curb consumption? b) What can you determine about the supply of alcoholic beverages (in terms of industry structure)? How might individual firms hope to get ahead in this market? c) Explain, using diagrams, how individual producers in this industry might be affected by the price floor implemented in Scotland. What determines the extent to which they are affected? d) Why do you think the policy makers have opted for a price floor over a tax? The Market for Alcoholic Beverages It is stated in The Economist print edition (2013) that according to World Health Organization, “the global consumption of alcohol has been stable since 1990”. However, across the world, small part of population consume a larger amount of alcoholic beverages (Alcohol pricing: We wish 2013). Even though the large-drinkers population is smaller than normal-drinkers or non-drinkers population, they do so in a more harmful and hazardous way (Alcohol pricing: Mulled Whines 2013). Alcohol consumption will not only affects drinkers but it also has social and economics implications. For instance, in many countries, government will cover the medical costs of the people in their country. So as a result, government will need to spend money on drinkers when heavy drinkers harm themselves or other people (World Health Organization 2011). Other than that WHO (2011) also mentioned that there are economic costs related to law enforcement and other costs. Demand of alcohol follow the law of demand, that is “holding everything else constant, when the price of a product falls the quantity demanded of the product will increase, and when the price of a prod... ... middle of paper ... ...e to reduce alcohol consumption. As an article in December 2013 The Economist stated “just as bans on indoor smoking spread rapidly from country to country, the Scottish decision on the price of booze could raise drink prices all over the world. A sobering thought in the festive season”. 7 Reference List Hubbard, G, Garnett, A, Lewis, P & O‟Brien, T 2012, Microeconomics, 2nd edn, Pearson, Sydney The Economist 2013, „Alcohol pricing: Mulled Whines‟, The Economist 21st December. Available from: . The Economist 2013, „Alcohol pricing: We wish you a merry(ish) Christmas‟, The Economist 21st December. Available from: lives-and-money-scotland-right-try-it-we-wish-you>. [8 May 2014]. World Health Organization 2011, Global status report on alcohol and health, WHO, Switzerland.
Prohibition not only failed in its promise to curb the social problem created by alcohol. It actually promoted s...
...vity to rise. Today, the use and abuse of alcohol continues to grow in the United States.
In the contents of this paper, four points of view will be discussed on an extremely controversial issue that has an effect on a large percentage of citizens in the United States. The issue at hand is whether the legal age to consume alcohol should be lowered from 21 to 18, and will state a pro and con side, as well as 2 stakeholders for each side of the argument. The stakeholders on the pro side are as follows: Underage consumers of alcohol, businesses that sell and the companies that produce alcohol. The people on the con side of the argument that would want the legal age to remain at 21 include State and Federal Law Enforcement Agencies, as well as the demographic of Parents that would prefer to keep their children from being exposed to alcohol at a potentially young age. As you continue to read the stakeholders opinions and arguments will be explained, after which the author’s personal opinion will be advanced. After doing my own in depth research on the topic, the legal age to consume alcohol should remain at 21 as set by the United States Congress when they passed the National Minimum Drinking Age Act (NMDAA) in July of 1984. This act punished every state that allowed persons below 21 years of age to purchase and publicly possess alcoholic beverages by reducing its annual federal highway apportionment by ten percent. (National Minimum Drinking Age Act) This caused all fifty continental U.S. states to set their legal drinking age to 21, and it has remained there for thirty years.
Muhlenfeld, Elisabeth. “Seeking a Drinking Age Debate.” University Business 11.10 (2008): 53-4. Academic Search Premier. Web. 3 Mar. 2010.
6. Thorton, Mark. “Policy Analysis: Alcohol Prohibition Was A Failure.” Online. 17 July 1991. http://www.cato.org/pubs/pas/pa-157.html
Economic and Social Effects of Prohibition There are many ways in which prohibition of alcohol consumption in the United States of America, damaged the very economic and social aspects of American culture, that it was. designed to heal the body. “Prohibition did not achieve its goals”. Instead, it added to the problems it was intended to solve.”
The brewing industry was once held to competition among many breweries in small geographic areas. That was almost a century ago. The U.S. brewing industry today is characterized by the dominance of three brewers, which I will talk about in this paper. There are many factors today that make the beer industry an oligopoly. Such factors include various advancements in technology (packaging, shipping and production), takeovers and mergers, economies of scale, barriers to entry, high concentration, and many other factors that I will cover in this paper. Over the course of the paper I will try to define an oligopoly, give a brief history of the brewing industry, and finally to show how the brewing industry today is an oligopoly.
The Beer makes up most of the alcoholic beverage industry, with a 74% volume in 2002 (Alcoholic Beverages, 2005). The production of beer around the world has increased from 36.85 billions gallons in 2000 to 38.78 billion gallons in 2003 (Alcoholic Beverages, 2005). Beer production has been a part of society close to the beginning of civilization. A Mesopotamian tablet dating back to 7000 B.C. contains a beer recipe named ¡§wine of the grain¡¨ (Alcoholic Beverages, 2005). In 1292, a Czech Republic town produced its first pilsner beer. A prominent beer brand, Pilsner Urquell, brewing dates back to the early thirteenth century.
Coase study #2 Beer: The vice president of marketing for a major brewing company is aware that college students account for a large proportion of beer sales and that people in this age group form lifelong loyalties to brands of beer. The executive is personally uncomfortable with the tasteless gimmicks used by her competitors in the industry to encourage drinking on campuses, including beach parties and beer-drinking contests. She worries about the company’s contribution to underage drinking and alcohol abuse among college students. Should she go along with the competition? State your case/opinion, etc.
Thies, C. F., & Register, C. (1993). Decriminalization of marijuana and demand for alcohol, marijuana and cocaine. The Social Sciences Journal, 30(4), 385-399.
The consumption of alcohol has a direct and often-negative impact on the lives of so many that
A change in quantity supplied is just a movement from one point to another in the supply curve. In opposite, the cause of a change in supply is a change in one the determinants of supply that shifts the curve either to the left or the right. These determinants are the resource prices, technology, taxes and subsidies, producer expectations, and number of sellers. An equilibrium price is required to produce an equilibrium quantity and a price below that amount is referred as quantity supplied of zero no firms that are entering that particular business. If the coefficient of price is greater than zero, as the price of the output goes up, firms wants to produce more of that output. As the price of the output goes up it becomes more appealing for the firms to shift resources into the production of that output. Therefore, the slope of a supply curve is the change in price divided by the change in quantity. The constant in this equation is something less (negative number always) than zero because it requires strictly a positive...
...trospective revenue of the company, rendering a price floor incapable of increasing revenue, which is the goal from the beginning.
That is, it is sensitive to price change, and also to the quantity demanded. This means that if many people are consuming a good, the demand is greater than if less people are consuming the good. To further clarify, take the example of attending college. In an environment where most of an individual's peers are going to attend college, the individual will see college as the right thing to do, and also attend college to be like his peers. However, in an environment where most of an individual's peers are not going to attend college, the individual will have a decreased demand for college, and is unlikely to attend.
...n the companies will have to decrease the price otherwise the product will not be sold at higher prices and the revenue would not be as large as companies would like to.