Outline the argument for and against smoking ban

Outline the main argument for and against creating a smoking ban in public areas. Is it good overall - justify your view Smoking is a de-merit good. This means that it is over-provided in a free market economy. The price mechanism has allocated too many resources than is socially desirable. Smoking is over consumed, as shown in the diagram below: The MSC (marginal social cost) and the MPC (marginal private cost) are not the same. They diverge. This is because society experiences a different cost from the good being consumed than the individual. The demand side is the same hence why MSB = MPB. The individual is happy when MPB = MPC, (10 a day). Therefore they consume where the red and green lines meet. Here their MPC = MSB so they are happy. Society is happy when MSB = MSC. So they want people to consume where the pink lines meets the green line. MSB = MSC (5 a day). Below 5 a day both the MSC and MPC are below MPB and MSB. So both society and the individual wants to consume the good. Above 10 a day the MSC and the MPC are above the MSB and the MPB so neither the individual or society wants more than 10 cigarettes a day. However in between 5 and 10 cigarettes a day, the MSC is above the MSB so society does not want to have that many cigarettes. The MPB is still above the MPC so the individual does want to have 6 to 10 cigarettes but society does not want them to. It can

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  • Level: AS and A Level
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"Discuss the Effectiveness of Supply Side Policies in Improving UK Economic Performance"

Kanak Shah Economics AS/b David Conquest "Discuss the Effectiveness of Supply Side Policies in Improving UK Economic Performance" Supply side policies are those designed to increase an economy's long-term growth and so increase aggregate supple or production. In terms of a graphical analysis, if supply side policies work, the long run AS (aggregate supply) curve would shift to the right. A number of various policies have been implemented to increase aggregate demand (AD). The first is deregulation. This involves removing laws and regulations which restrict competition. With deregulation, more firms will compete in the industry and the total supply of the good or the service will increase. A good example to look at is airline deregulation. All Europe flight routes were regulated by governments. There was not very much competition. With the introduction of deregulation, any airline company can fly on any routes that they bid for e.g. EasyJet and Buzz (all low cost airlines). This increases passenger numbers and there is more aggregate supply in the industry. There are a couple of advantages of deregulation. Less regulation means that fewer regulators need to be employed by the government or local councils. Also less regulation should encourage more competition. However, many rules affecting business were to stop exploitation: is this acceptable nowadays? Another

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Income and Price Elasticity of Demand

A guide for income elasticity of demand Income elasticity of demand measures the relationship between a change in quantity demanded and a change in income The formula IED = % Change in Quantity Demanded % Change in Income Levels The numbers If IED is LESS than 1 it is income INELASTIC. If IED is GREATER than 1 it is income ELASTIC. Higher the IED the more responsive demand is to a change in income. Lower the IED the less responsive demand is to a change in income. Plus or Minus Significance NEGATIVE - = INFERIOR GOOD POSITIVE + = NORMAL GOOD Inferior Good Inferior goods are when demand for a product falls, income levels rise. Normal Good Normal goods are when demand for a product rises, income levels rise. Necessities and luxuries are normal goods. Examples of necessity would be toilet roll. Examples of luxury goods are expensive cars and designer clothes. Between 0 and +1 is a normal necessity. Greater than +1 is a superior/luxury good. Example In this current climate people income decreased and started to buy more inferior goods. E.g. Before the recession people would have bought Andrex toilet roll, however in the recession they would have bought supermarkets own brand toilet roll which would be a lot cheaper. Usefulness Using the IED formula a business can work out the change in quantity demand if the income level changes. This way they can

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The effect of Trade Unions on causing Labour Market Failure Today

Comment on The effect of trade unions on causing labour market failure today Labour Market Failure (LMF) occurs when the market forces of demand and supply do not results in an efficient allocation of labour resources. A major cause of LMF is the abuse of trade union. However as the market changes, this cause of LMF is losing significance. Trane Unions are organisations which act on behalf of workers to gain better rights and benefits through collective bargaining, they are attractive to workers as the bargaining power of a union is always more powerful than that of an individual. Trade union have, for many years been a major cause of LMF and to an extent, still are.since their inception, trade unions main aim has been to increase wage rate for workers. Whilst this is a great benefit for union memebers, it can cause signifigant market failure. The below diagram shows, that the new wage rate my cause market failure through unemployment. As the market forces of supply and demand settle on a wage rate of W1, the presense of a union increasing the rate to W2 will cause LMF by causing employment to drop from L1 to L3 This is despite their being L2 amount of labour supplied, the gap between potential labour force and the actual employment rate means there are unused resources. And thus the market is not efficient, meaning LMF. This effect is still present today. As the gov't

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  • Level: AS and A Level
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Is Increased globalization a good thing?

Is Increased globalization a good thing? More and more people are becoming aware of the 'shrinking' world. The golden arch of McDonalds and the infamous Coca Cola logo are inescapable in almost every country. We only have to go as far as the nearest supermarket in order to see the extent to which citizens of one country are dependent on imported goods from other parts of the world. The World Wide Web is the most graphic example. In order to assess whether increased globalisation is a good thing or not, this essay will firstly discuss the term 'globalisation'. Then it will analyse the advantages and disadvantages of globalisation in our contemporary world. Over the course of the last few decades, the term 'globalization' has slowly crept into the words of politicians, economists, journalists, entertainers alike. It is a term especially controversial to define because it is a subject which undergoes constant dispute between academics about just what it means to speak of globalization. It is commonly associated with words such as capitalism, modernisation, liberalisation and is often used as a synonym for internationalisation and universalisation. Perhaps a good starting point for the discussion is one where globalization is defined as 'the process of increasing interconnectedness between societies such that events in one part of the world more and more have effects on

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Define and determine the types and trends of UK unemployment

"Define and determine the types and trends of UK unemployment" Unemployment is when individuals are jobless but are willing and able to work at the going wage rate. The official government figures only count those that are registered as being unemployed and are actively seeking work. Different Measures of Unemployment There are several different measures of unemployment: * ILO - Any person without a job, available to work, willing to work and sought work in the past four weeks * Labour Force Survey (LFS) - Available to work within the next two weeks, currently without work, but have sought work in the past four weeks * The Claimant Count - This measures the number of people who are eligible and claim the Job Seekers' Allowance, as such, this method generally records fewer unemployed (around 400,000) From these figures is it possible to calculate the Unemployment Rate: Number of unemployed/number of economically active x 100 Types of Unemployment There are many different types and causes for unemployment: * Real wage unemployment: This is thought to be the result of wages being above the market clearing level, leading to an excess supply of labour. It is thought that national minimum wages can cause wage unemployment because the employees feel that the work is not worth the minimum amount. * Demand deficient unemployment: This is usually associated during a period

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Discuss the strengths and weaknesses of demand-side policies (fiscal and monetary policy)

Discuss the strengths and weaknesses of demand-side policies (fiscal and monetary policy) [18] Demand-side policies are a government's attempts to influence the level of growth of aggregate demand and hence the levels of employment, real GDP, inflation, growth and balance of payments position. A government will do this by using fiscal and monetary policies. Fiscal policies involve the use of government spending, taxation and borrowing to influence both the pattern of economic activity and also the level and growth of aggregate demand, output and employment. Monetary policies involve the use of interest rates to control the level and rate of growth of aggregate demand in the economy. Different types of demand-side policies can be used depending on the position of inflation in an economy. Reflationary demand-side policies seek to increase aggregate demand and raise the level of planned expenditure at or near the level of potential GDP. Deflationary demand-side policies decrease aggregate demand in the event of aggregate demand running ahead of aggregate supply and posing inflationary risks or leading to an unsustainable deficit on the balance of payments. An example of when reflationary demand-side policies would be used is when aggregate demand is too low, so for instance when taxes are high and interest rates are high. The policies that would be used in order to shift

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Export Essay

Explain why the recent devaluation of the £ has not resulted in a significant improvement in the export performance of the UK. (25 Marks) Under normal circumstances a devaluation of the pound should make exports more price competitive and lead to greater export performance with greater quantities being sold. However this may not always be the case and might not always lead to a fall in the value of products imported. A fall in the exchange rate should lead to an improvement in the current accounts however following recent figures this is not true. Over the past few years given the 25% devaluation in sterling our export performance is not that impressive. Firstly, the demand from other countries to buy UK exports has not been too good due to the recent recession. Therefore aggregate demand (AD) decreased leading to a fall in UK exports. The UK has been running a persistent current account deficit for several years, but as the economy emerges from recession and domestic spending will return thus helping growth, import growth has still been stronger than exports. The rest of the world may also have a slow recovery in demand, especially in the European Union where household spending has not been up to scratch. Another reason it seems is that Britain's main trading partners have been stuck in low or no growth and are therefore unable to buy more goods and services. Here the

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Discuss the extent to which an increase in exports will improve an economy's macroeconomic performance.

Good macroeconomic performance is normative in nature therefore hard to be validated. However for the purpose of this essay, good macroeconomic performance basically involves low unemployment, high and stable economic growth, stable and low inflation and an acceptable and positive current account of the balance of payments. An increase in exports will bring about and increase in aggregate demand in the short run. Aggregate demand is made up of consumer expenditure, government expenditure, investment and net export, export minus imports. Therefore an increase in exports will increase net export and subsequently increase aggregate demand. An increase in aggregate demand would mean an increase in economic growth, which shows good economic performance. Diagram below shows the increase n aggregate demand. Exports will also improve the county's balance of payments. Balance of payments is the net trade in goods, services, investment and transfers. An increase in exports will mean that overall balance of payments will not be in a deficit but in a surplus. An improving balance of payments will also mean that the county's industries and firms are competitive and therefore show that the firms are economically healthy and performing well. However there are problems arising from an increase in exports. In the short run, with a short run supply curve, although an increase in exports will

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Asses the extent to which the internet has made markets more competitive

The internet, created for access by the world's population approximately twenty years ago, has evolved exponentially to improve market competition among firms and businesses. Its uniqueness has come from its ability for easy use and freedom of information, though with these fundamental principles, other characteristics have brought us closer to a sense of perfect competition than ever before. Indeed, the internet is rapidly becoming a necessity rather than the luxury it once was. In theory, the internet should mean that every market works perfectly. However, even the internet provides detrimental effects, often different to those of conventional means such as typical market failure. The internet has been used to widen the customer base of particular businesses, creating greater profit margins than could ever have been imagined. This has been accentuated through the tactic of pricing internet-ordered goods and services cheaper than those on the high street. Consumers who may be disadvantaged due to disabilities, age, time constraints and so on are those who use the internet the most to buy. Previously, these people would have found it difficult to buy, but with the internet comes these frequent buyers. Even people who would have normally bought from high street shops would have the option of buying from the internet. Usually, a lot of people go out and buy things to socialise

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  • Level: AS and A Level
  • Subject: Economics
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