- With the help of a supply and demand diagram explain how an increase in the age limit to 21 might affect the market for alcoholic drinks.
In figure 1, we can see that in reducing the age limit for
drinking to 21, it should in effect reduce the demand for
alcoholic drinks. So in the reduced demand of alcohol,
the brewery therefore should be forced to cut back supply.
This could then lead the supply and demand diagram to
look like figure 2.
The demand for alcoholic drinks is inelastic, no matter
what rules you change, the demand will only slightly
falter. However, in raising the age limit, this does not
necessarily mean that demand will decrease. It could just
raise the amount of underage drinking. Many people
would simply get a friend to buy them the alcohol cheaply
at a store or off licence. It could also increase the use of
fake ID, so in effect it’s raising crime. The market for
Alcohol could try and advertise to an older target market,
to fill in the gap in the market for demand from age 18 to
21. They could use new product developments which will
appeal to this market.
- Evaluate possible economic policies other than increasing the age limit, that a government may use to reduce significantly the consumption of alcoholic drinks.
To reduce significantly, the consumption of alcoholic drinks, the government could enforce a number of different measures. Firstly, a minimum price per unit of alcohol. Alcohol is becoming increasingly cheaper and easier to buy. For example recently, Morrison’s was offering two cases of beer for only £16. This could lead to people binge drinking which can lead to more and more crime on the streets. So in adding a minimum price per unit, it will become more expensive to buy alcohol which should bring demand down. However, this would be bad news for brewery’s and licensees.
Another way that the government could reduce alcohol consumption is by cracking down on underage drinking. Around 80% of teenagers in high school have consumed alcohol. Many do simply cause of pressure or culture. The government could reduce this by advertisement and education. If they reveal the dangers to health to younger people through school, then they would be less inclined to drink underage.
Also, regulating the price and availability of alcohol could help reduce alcohol
consumption and damage to society. By having all sectors of the public involved,
such as the police, health sector and alcohol industry, consumption could be significantly reduced.
The government could also tackle the problem through tax. In increasing the tax, it should make the demand decrease, which in time will bring the amount of supply down. Therefore reducing alcohol consumption and the tax could be used on crime caused by alcohol or the promotion of not drinking it.
The use of fake ID’s is relatively high, so if the government came up with a new ID card which had a special proof of some kind, such as the queen’s head on a twenty pound note, then it would make it hard for younger people to use fake ID as a way of buying illegal alcohol. This would therefore effect in a reduced demand of alcohol.
The main problem is the availability of cheap booze which is damaging the nation’s health. Alcohol is now responsible for several types of cancer. If the government make it harder for younger people to buy the alcohol. Overall, we can see that increasing the age limit for alcohol is only one of the many options available to the government. I believe the most effective would be education, although it would take a long time, it has a long term effect and benefit. Which would greatly benefit future generations.