UNIT 4B- 10/20/30 mark potential question? look at ASAP Flashcards
“evaluate the extent to which the UK government should regulate e-cigarettes? (30 marks)
give an essay plan for what needs to be included..
…Definition of regulation- is a government policy for creating rules/laws.
Reasons for regulation e-cigarettes:
…imperfect information available-therefore needs stronger restrictions on labeling. Without warnings people may over consume this good.
…they need regulating to protect vulnerable groups, as they contain flavours such as banana/raspberry it may encourage people who have never smoked before to start, therefore regulation can assure quality and reduce harmful additives.
…regulation ensures consumers get a safer product which limits the impact on their health.
However, (evaluation)
…over regulation could lead to further government failure. such as increasing taxation levels, will lead to higher prices for consumers and make this merit good become more price elastic, therefore consumers may not switch from normal cigarettes, therefore market failure associated with tobacco may persist.
“Assess why different countries have different cigarettes prices”? (8 marks- give an essay plan for this)
knowledge- depends on the countries taxation level i.e. different excise duty.
depends on the minimum wage and GDP of the country.
the taxation level in the UK is different to ones outside the EU.
Application:
UK has a tax incidence of 77%, whereas outside the EU has 60%.
Evaluation:
..good source of tax revenue.
..reduces market failure.
..could lead to black markets in some countries.
20 mark question- “Assess the potential impact of e-cigarettes on the tobacco industry”, give an essay plan?
negatives:
…e-cigarettes may reduce demand for this good.
…price inelastic demand, therefore consumption will not fall.
…some businesses may see a fall in revenue/sales.
benefits:
..Risk bearing EOS- they tobacco firms such as BAT, already have a business in the e-cigarette market.
…impact will depend on the currently policy of the UK government.
…may stem a fall in demand in the long run for tobacco products, as e-cigs are a healthier substitute.
application: still 70% of e-cigarette smokers still smoke cigs.
30 marker- “Should the UK government prescribe e-cigarettes or not? give benefits and negatives?
benefits:
…good substitute for tobacco.
…could be used a quitting tool for smokers.
…will reduce social costs to society.
…should internalise the negative externalities.
negatives:
…long term effects on e-cigarettes.
…users still addicted to nicotine.
…vulnerable groups can get hold of e-cigarettes more easily.
…less tax revenue for government in terms of cigarettes.
…lost output for NHS, as they are a cheaper substitute.
…can be used as a gate
10 marks- “Assess the usefulness of “COBA” to the UK government when formulating policy on tobacco and E-cigarettes?” (give 4 benefits/cons)
benefits:
…a policy to look at the costs/benefits of them, if costs out weighs benefits, can go ahead with the project i.e. raising taxes.
…risk assessment.
…up to date information.
..helps reduce the external cost of smoking and could help reduce negative externalities.
negatives: ...costly to implement. ...takes time to implement. ...its a prediction, therefore may not be accurate. ...research needed.
30 marks- “Evaluate the likely impact of increasing tax on tobacco?” (4 benefits/cons)
benefits:
…should internalise the external cost (£2.5-£6BN) NHS cost, and currently the UK government receive £12BN in revenue from tax levels on tobacco which can be used on education.
…good source of tax revenue- help reduce the budget deficit.
…should reduce the market failure, as people will choose a substitute such as e-cigarettes.
…internalise the negative externalites, making smokers pay the true social cost.
Negatives:
…could increase shadow markets, hard for UK government to control, leading to loss of government revenue.
…could lead to government failure, (regressive tax- leading to further inequality).
…a large increase in tax incidence will be needed,as it is an inelastic good.
NEEDS A GOOD CONCLUSION.
30 marks- “Assess the likely effectiveness of UK government policies on tobacco in correcting the market failure? (essay plan)
knowledge- what is the current market failure associated with tobacco.
current UK policy- tax level (77%)
…tries to internalise the social costs to a more optimal level.
…good source of tax revenue, however regressive tax.
…links in with the Fiscal policy.
…may need to increase tax further, to fully reduce the inelastic good.
Government running anti-smoking campaigns.
…protects vulnerable groups from smoking.
…8% of 15 year olds smoke atleast once a week.
…costly to implement.
…should reduce consumption.
banning smoking in public places.
…should reduce external costs such as passive/2nd hand smoking.
…should reduce the market failure.
…however, could lead to further government failure- i.e. less money going into local businesses e.g.pubs.
30 marks- “should the WHO (World Health Organisation) classify e-cigarettes as a tobacco product and be treated the same as cigarettes? (essay plan- give pro’s/con’s).
knowledge: e-cigarettes are a good solution to help reduce the market failure associated with smoking.
application:
…treating them the same would be an issue, as it would restrict demand i.e. banning advertising and introducing health warnings on e-cigs.
application for the question (pro’s/con’s)
…they both contain nicotine, the addictive part of cigs/e-cigs, therefore could make them the same. However, it is known that e-cigarettes have less negative externalities, therefore reduce external cost to society.
…they can help reduce the external costs associated with tobacco.
…help reduce the market failure.
…if classified the same, further source of tax revenue to reduce budget deficit.
However,
…imperfect information available.
…still contain nicotine and give some consumers popcorn lung.
..they need health warnings to protect vulnerable groups. i.e. flavours.
