Market Failure Stats & Questions - A* Content Flashcards
Sugar, fat (obesity)
20% of 10-11 year olds are obese
25% of adults are obese
Mexico Sugar Tax cut sales of sugary drinks by 12% in first year
£16 bn NHS cost/year to treat obesity related illnesses
Cigarettes/ E Cigs
Cost to NHS is somewhere between £3-6 bn per Year
PED is between -0.8 and -0.6 (significantly inelastic)
Alcoholic Drinks
Cost to NHS £3-5bn per year
Cost to UK society is £21bn per Year (including police, vandalism and other mess)
PED of beer lies between -0.3 and -0.7, whereas wine and spirits are much more price elastic
Gambling
Cost to society is £1.2 bn
(Negative externalities include mental health issues from addiction and crime)
It also raises inequality
Road Congestion
Cost to UK economy is roughly £20bn per year in lost productivity
Air pollution
In the UK you are roughly 64 times more likely to die from air pollution than in Sweden, and two times more likely than in the US
Indirect taxes - the different types of tax placed on goods and services
Specific tax - this is fixed, and hence the amount of tax added is the same regardless of the price of that product. The prime example being Excise Duty, which is typically placed on goods and services with negative externalities like cigarettes.
Ad valorem taxes - charged as a proportion of the price of a good. The prime example being VAT (which is placed on most goods and is applied at each stage of the supply chain where value is added, from the point of production to the point of sale)
Education / Health
The cost of providing education by the state is ~£120 bn per year.
The cost of the NHS is ~£180 bn per year.
(Approx 25% of all government spending)
Policies for reaching the equilibrium, other than spending more to increase the supply, involve trying to reduce the demand - such as by providing digital healthcare solutions, or introducing a private sector to reduce demand in the public sector.
