Sunday, March 09, 2008

Unit 2: Higher taxes on some alcohol and lower taxes on smoothies

This BBC video clip (and associated article) says the Tories would adjust the alcohol taxes currently levied to reduce binge drinking

http://news.bbc.co.uk/player/nol/newsid_7280000/newsid_7282700/7282722.stm?bw=bb&mp=rm&asb=1&news=1&bbcws=1

http://news.bbc.co.uk/1/hi/uk_politics/7282308.stm

a) What type of market failure does binge drinking represent?
b) Whar actions does the government currently take to correct the market failure and how successful do you believe them to be?
c) What drawbacks can you see to the proposed Conservative plans?

The Liberals have a slightly more advanced approach; not only do they want to deter alcohol consumption, they also want to increase consumption of "healthy" drinks by altering the tax system

http://news.bbc.co.uk/1/hi/uk_politics/7284703.stm

a) What type of market failure do the Lib's believe smoothies represent
b) If their plans were put into effect, how would there be a more allocatively efficient use of resources?

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