Canadian Economy: Macro & Alcohol Policy
Added on 2020-02-24
14 Pages2522 Words53 Views
Economics
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Running head: FIRM, MARKETS AND BUSINESS MANAGEMENTFirm, Market and Business ManagementName of the StudentName of the UniversityAuthor note
1FIRM, MARKET AND BUSINESS MANAGEMENTTable of ContentsAnswer 1..........................................................................................................................................2Alcoholic beverages demand and macroeconomic factors..........................................................2Answer 2a........................................................................................................................................3Performance of Canadian Macroeconomic Environment............................................................3Answer 2b........................................................................................................................................5Answer 3a:.......................................................................................................................................7Answer 3b:.....................................................................................................................................11References......................................................................................................................................12
2FIRM, MARKET AND BUSINESS MANAGEMENTAnswer 1Alcoholic beverages demand and macroeconomic factorsDemand for goods like alcoholic beverages is always subject to substantial policy debate.The hard and fast rule of demand cannot be applied here. This is because of ambiguous effect ofthe alcoholic beverage consumption. Demand for alcoholic beverages is important for differentmacroeconomic fields. The positive effect of higher demand is it has significant contribution inraising government’s revenue in Canada (De Goeij et al., 2015). The revenue sources from thisindustry include monopoly liquor shop, licensing fees for new and existing liquor shop andimposed exercise duty on such items. Two factors need to be considered in determining alcoholic beverages demand in Canada.First is, in the last few years incidence of immigration has rapidly increased in Canada. Thisleads to some major demographic changes for Canadian population. The likely changes indemographic feature affect beverages demand. This is the reason for varying alcoholic beveragesdemand for different provinces of Canada. The next demand-influencing factor is that use ofdiscriminatory policy for sales and advertising different types of beverages. The demand fordifferent category of beverages is different. For example, people often prefer wines to beer orspirits because wine has a greater cardiovascular benefit. Demand for spirit is elastic whereas wine demand is inelastic in response to its own price.Sprit and Wine are often considered as substitutes though wine is more preferred than Spirit. Onthe other hand relation between beer and spirit is complement is nature. Wine demand has arelatively income elastic demand (Amlung & MacKillop, 2015). Hence, alcoholic beverages are
3FIRM, MARKET AND BUSINESS MANAGEMENTconsidered as a luxury item in Canada. There is an independent relation between alcohol demandand unemployment level in the economy.Answer 2aPerformance of Canadian Macroeconomic Environment Oil price in Canada has experienced a 30% drop in the last two quarters of 2014. Thesluggish oil market affects investments in major energy companies. Since, energy sector is animportant determinant of economic growth, the events resulted in a negative growth in someterritories of Canada in the beginning of 2015. The downturn in the energy sector continued in2015 and 2016 results in a continuous trend of slower growth. The projected growth rate waseven lower than 2.2% (Smith, 2017).Figure 1: Oil price trend(Source: canadianbusiness.com 2017)
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