(PDF) The effectiveness and effects of alcohol regulation

Added on - 14 Nov 2019

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Running Head: Alcohol and Cigarettes RegulationThe Negative Impacts of Cigarette Smoking and Beer ConsumptionStudent NameInstitutional AffiliationCourse/NumberInstructor NameDue Date
Alcohol and Cigarettes Regulation2The Negative Impacts of Cigarette Smoking and Beer ConsumptionIntroductionBeer consumption and cigarettes smoking are some of the factors that are responsible formany deaths in the world every year. Beer consumers have resulted in many accidents that hastaken the life of many innocent individuals. The smoking of cigarettes has resulted in manyhealth issues such as cancers and has resulted in many deaths as well. Cigarettes are lessexpensive than beer and thus are more likely to be abused. There are more deaths that resultsfrom cigarettes consumption in comparison to beer consumption. There is a need for thegovernment to raise the social welfare of the citizens by ensuring that it saves as many lives aspossible. Saving of these life means discouraging their consumption; it is only achievablethrough making these products more expensive. This paper will determine their relationship andconfirm whether the argument posed by the Washington University that discouraging cigarettecould reduce beer consumption is true.Question Part 1The beer and wine markets are faced by reduced regulations compared to the cigarettemarkets. The number of alcohol consumers are lesser than those for cigarette consumers; thisexplains why there are more cigarette-related deaths compared to alcohol-related deaths. Beerand cigarettes have a complementarity in consumption (Moore, 2010); wines and cigarettes haveno close relationship. It is with a high possibility to get a person who is taking beer to besmoking as well. People who are dependent on wine consumption belong to a higher class of lifeand thus they choose better living standards and thus it’s difficult for them to indulge inunhealthy behaviors such as cigarettes smoking (Ingraham, 2014). However, for the case of beerand cigarettes smoking the two goods are complements, thus, an increase in cigarettes tax todiscourage its consumption also discourages the consumption of beer but at a lesser proportionthat the reduction in cigarette smoking. Some people are not satisfied with just the consumptionof beer alone; they feel much better when they complement the beer with other substances aswell (Moore, 2010); cigarette is the major choice of complement for beer consumption.
Alcohol and Cigarettes Regulation3Question Part 2iFig: The shift in demand for complementary goodsPrice ofCigarettesP*D1D*0Q1 Q*Quantity of BeerAssuming that initially the demand for beer was equal to Q* and the price was P*, initialdemand D*, the introduction of health warning on the cigarettes packaging will have thefollowing impact on beer demand. The warning will make the cigarettes consumers to be morecautious and thus their demand for cigarettes will fall at every price level(White, Williams,Faulkner & Wakefield, 2014).Since the change in the cigarettes demand results from a change inpreference rather than price, the initial demand curve D* shifts leftwards to D1. There is a shiftin demand curve for all non-price demand influencers (Chand, 2016). The quantity of beerdemanded falls from Q* to Q1 as observed above. Thus the impact of health warning oncigarettes is to reduce the consumption of beer(Wigg & Stafford, 2016).
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