Discussion on Alcopop Taxes

2114 Words9 Pages
Case Study of Australian Alcopop Taxes

Table of Contents

1.0 Executive summary 2
Introduction 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
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So as we can see- the demand curve shifted to the right.

3.2 Theories of Elasticity and government intervention
Theory of Elasticity is used to refer a ratio of change (seen graph 2.0). Alcohol is an elastic product – however due to the majority of its consumers being addicts – the users depend on this product and would easily switch to a substitute alcohol if prices were too high. This is what is happening today. This is why we are here to discuss an alternative solution.

graph2.0 ΔQ :the change in quantity;
ΔP: the change in price. (Gillespie, 2007 )

The government is allowed to interfere with our economy and this is called government intervention. Government intervention normally takes place to regulate industries and to safeguard the best interests of our nation – not their tax budget. As a mixed economy –economy is determined by the market; firms and companies as well as through government intervention. It is apparently acknowledged that the government supposedly wants to help out teenagers who do not know any better. When the government set a new law – with $2billion in extra tax revenue while doing nothing else, the teenagers are still out there getting drunk (Gordon & Harrison, 2008 ). The issue is not getting any better – it is actually getting worse.

4.0 Alternative actions and solutions

Since the analysis has covered the key issues in our case and their relevance to the theories.

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