Discussion on Alcopop Taxes
Table of Contents
1.0 Executive summary 2
2.0 Analysis of the case 3 2.1 Definition of Alcopop 3 2.2 Evaluation of the case 3
3. 0 Relative economic theory 5 3.1 supply-demand theory 5 3.2 Theories of Elasticity and government intervention 5
4.0 Alternative actions and solutions 6 4.1 Causes of teenagers’ drinking 7 4.2 Solutions and actions 7
5. 0 Conclusion 8
1.0 Executive summary
Alcopop refers to alcoholic beverages that are popular with young people. It is widely taken among underage drinkers. In order to cut potential danger caused by alcopop and to raise revenue, recently Australian government has promoted alcopop tax.
The main purpose of the article is to set light on …show more content…
Last of all, it is the factor of alcohol retailers. Their sales are affected, in that their alcopop sales have been reduced and their sales in spirits and beers which in turn increase. Both of spirits and beers are substitute products to alcopops and changes of the supply-demand relation will cause alteration of retailers’ profits that is correlative with tax revenue（Christian, 2008）.
3. 0 Relative economic theory
3.1 supply-demand theory
This theory is a model that describes how price determines supply and demand. Naturally; consumers would switch to an alternative or substitute product. In this case the substitute product was beers and spirits when the government increased alcopop tax. This is a perfect example of the laws of supply and demand as it can be shown from the following graph.
Seen from the graph; when alcopop tax was increased – demand shifted to the left – reducing the quantity bought. Price