Economic issue - Vaping

Question 1

3 Main reasons the government may intervene in the market

Answer 1

1 - Stabiles the economy - Usually through increasing or decreasing interest rates

2 - Redistribute income - Through taxes, pensions, benefits, allowance

3 - Reallocate resources

Question 2

3 Main reasons why the government may need to intervene in the economy to reallocate resources

Answer 2

1 - The market may not produce enough socially desirable goods and services

2 - The government may intervene to prove goods that the privet sector wont supply

3 - The market may produce socially undesirable items

Question 3

Method of intervention - Tax

Answer 3

How it works - “Excise Tax” increase price, decrease demand

Question 4

Method of intervention - Laws

Answer 4

How it works - Federal government > introduces the law > legislation
Police > enforcing the laws

Question 5

Method of intervention - Education

Answer 5

How it works - Government > ads, packaging > health warnings, restrictions on ads > gambling, sponsership