Discuss the economic arguments for and against imposing substantially higher levels of taxation on the sale of alcohol.

Alcohol is categorized as a faulting good. A error good can be defined as a product, such as cig bettes, which consumers may all overvalue and tend to over consume but which the organisation believes may be pernicious for consumers. Demerit goods are those goods whose negative externalities are real gamy. First, to be able to analyse whether the administration should impose substantially high levels of levyation on the sale of alcoholic beverageic drink, we must determine the make full the tax get out shit on the consumption of alcohol and the alternate in the revenue made by the government by increasing the tax on alcohol. The following draw illustrates the effect of additional taxes on alcohol:- As the diagram shows the regard for alcohol is highly inelastic alcohol i.e. a change in the price of alcohol will direct in a small change in the quantity demanded of alcohol. This is because a product like alcohol is addictive in nature. When a tax is imposed on al cohol, it leads to a open frame in the supply curve with supply decreasing from S1 to S2 and at that place is a considerable rise in price from p1 to p2. However, the swing out in quantity demanded is relatively small with quantity demanded travel from q1 to q2. When taxes are imposed on a good, suppliers can drive to pay the taxes or pass it on to the consumers in the make for of a price hike. They usually make this decision base on the elasticity of the demand. If the demand is inelastic, then the tax will be passed on to the consumers. As the diagram clearly illustrates more or less of the tax incidence falls on consumers- the portion that is shaded from p1 to p2. Suppliers excessively have to pay some of the tax but it is a very small part of... If you want to get a enough essay, order it on our website: OrderCustomPaper.com

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