Example Bank Flashcards
What is an example of a negative consumption externality?
Smoking Cigarettes.
What is the annual cost to the NHS of smoking?
£2-6 Billion.
What is the overall cost to the Taxpayer of Smoking Cigarettes?
£14 Billion.
What is the annual cost to the NHS of Drinking Alcohol?
£3.5 Billion.
What is the cost to the economy of drinking alcohol?
£52 Billion.
What is the cost of firms causing air pollution?
£42 Million annual health and social care costs.
How much does exercise save the NHS per person per year?
£100.
How else does exercise help the NHS?
Employer benefits of greater productivity and lower absenteeism.
What is an example of a public good?
Flood defences.
How are flood defences non-rival and non-excludable?
No price can be charged for them, they don’t diminish in quantity upon consumption.
What is an example of a Quasi-Public good?
Beaches.
How are beaches an example of a Quasi Public good?
They can become excludable if they’re owned by a hotel. Can become rival during peak times of congestion.
What is an example of tragedy of the commons?
Deforestation in Kuala Lumpur.
What is wrong with forests in Malaysia not being privately owned?
Malaysia has the fastest rate of deforestation of any country.
How much forest coverage has Malaysia lost since 2000?
15%.
What resource is found in Malaysia which is valuable?
Palm Oil.
What does this result in?
Resource Depletion.
What is an example of indirect tax and market failure?
Sugar Tax.
How much was spent on the direct medical costs of government spending?
£16 Billion per year.
What % of children are obese or overweight?
1/3.
What was the tax rate for drinks with low sugar content?
18p per litre.
What was the tax rate for drinks with high sugar content?
24p per litre.
What was the impact of the sugar tax for companies?
50% of companies changed their recipes to reduce sugar volumes.
How much was sugar content reduced by in drinks?
28.8%.
What was the impact for government?
It raised £240 million in its’ first year, which was used to fund sports in primary schools.
Why is the sugar tax regressive?
They affect low income families, as they spend a higher proportion of their income on beverages and foodstuffs.
What was elasticity like for poorer households?
Lower income households had higher elasticity of demand.
What was the justification for the regressive nature?
Tax will result in a greater decrease in consumption.
How can nudges be used to dissuade customers from buying sugary drinks?
Any decrease in quantity demanded of sugar due to a tax will be short term, and offset later.
How was the sugar tax ineffective?
Not much was passed onto consumers, the producer payed a majority of the tax.
What did the British soft drinks association claim about the tax?
It would cause 4000 job losses in the soft drinks industry.
What is an example of Subsidies?
The US Government subsidises the corn industry.
What has the subsidising of the corn industry led to?
Overproduction of corn, overusing fertilisers, soil erosion, water pollution.
How has the subsidy led to a rise in obesity rates?
High fructose corn syrup has become a cheap sweetener alternative.
