Increasing taxes of alcohol Essay Example | Topics and Well Written Essays - 1250 words

Increasing taxes of alcohol - Essay ExampleAccording to the health minister, when in the socio-economic class 2000 the previous government initiated a tax decrease on these products, it led to a drastic change magnitude in the pulmonary tuberculosis of these products. Official info suggests that the consumption increased form 14 percent to around 60 percent with untried girls. Moreover, an even more alarming situation for the government is that the consumption of ready to alcohol drinks is increasing within teenagers and data suggests that girls are even more responsive towards this curve in comparison with boys. The government hopes to reverse this trend with this price increase since the segment is price sensitive plus the government also promises to spend the tax revenue in preventive health schemes.The preceding(prenominal) case in many ways relates to different concepts of economics. The first one can be the very basic singing of price and demand. Economics at its initia l level teaches that price supercharged for any product and measuring stick demanded of that product enjoy a negative or inverse relationship. If price charged for a product increases than the quantity demand decreases and vice versa1. This case shows a similar kind of a situation. According to the health minister when in year 2000, the previous government decreased the taxes, it led to the decrease in the price charged for it to consumers and this decrease in price led to a drastic increase in the quantity demanded for ready to drink alcohol drinks. Official data suggests that it rose from 14 percent to 60 percent within the segment of young girls. The price demand relationship explains the idea and phenomenon behind this happening.Another important concept of economics applied here is the price elasticity of demand. Sensitivity of quantity demanded to the changes in the price charged is the price elasticity of demand. In order words, it can also be said that it refers to the res ponsiveness of demand in relation to the changes in price.