Unemployment Challenges Among Younger Population in Australia and Pakistan

Economic for Business
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Economics For Business 1
ESSAY 1
Introduction
Notably, the Australian government has implemented price, on-price and taxation
measures to curb smoking within its borders. There is the implemented tobacco control, Tobacco
advertising prohibition Act of 1992 among other practices. The desire to curb smoking is to cut
costs incurred in welfare and health of tobacco related ailments among other costs. Through the
imposition of the excise duty production of tobacco cigarettes might reduce thus limiting
consumption of the cigarettes on the cost and benefits scale. The rate of smoking per day in
Pakistan is higher than Australia’s daily rate of smoking. However, through the imposition of the
excise duty, the demand for tobacco based cigarettes will reduce thus a benefit for the good
health and a reduction of the economic and health related illness costs on behalf of the Australian
government. Equally, the Pakistan government has implemented price, on-price initiatives such
as legislation on prohibited advertising of tobacco products and prohibited smoking in public
places to discourage smoking and reduce the exposure to it ,all in all and smoking is a universal
challenge.
Notably, the Australian daily smoking rate is 14.4% according to the National health
survey 2014 to 2015(Department of health 2018).Notably in the same year 2015, the rate of daily
adult smoking in Pakistan stood at 41.9% in 2015(Tobacco atlas 2015).This figures goes to show
the smoking rate in Pakistan is higher than the daily smoking rate in Australia .Unlike Pakistan,
the rate of smoking in Australia is on a downward trend as illustrated in the figure
below.However,for both Pakistan and Australia ,the group of persons smoking involves males,
females and children. In addition, both Australia and Pakistan are parties to the World Health
Organization Convention Framework on Tobacco control thus making their objectives and

Economics For Business 2
practices on tobacco control almost similar such as prohibited advertising, prohibited public
smoking among others. Regarding tobacco control measures, both countries have prohibited
smoking in public places and prohibited or limited tobacco cigarettes advertising and promotion
practices. This measures are aimed at limiting the exposure and spread of tobacco smoking.
(Department of Health 2018)
2. EFFECT OF EXCISE DUTY ON CIGARETTE DEMAND IS INELASTIC /ELASTIC
Essentially excise duty affects the demand of the good or service to which it is imposed.
Usually, excise duty taxes shift the demand of the particular good as illustrated in the graph. Due
to the inelastic demand of tobacco cigarettes, the quantity of cigarettes produced will remain the
same due to the addictive nature of tobacco cigarettes consumption. Due to the addictive nature
of cigarettes the demand for tobacco cigarettes after the excise duty will remain
unchanged .Generally, excise duty is imposed on the manufacturers of tobacco cigarettes in this

Economics For Business 3
scenario. An increase in excise duty will increase the cost of production thus limiting the level of
production of tobacco based cigarettes. With the limited production of tobacco and the inelastic
demand for cigarettes due to their addictive nature, consumers will incur additional costs during
purchases thus increased revenue for the Australian government in the event of inelastic demand.
The Australian government seeks to control production of the tobacco cigarettes through price
controls, taxation and non-price controls inclusive of prohibited advertising and legislation
(Acosh, 2018).
Price Supply
P Inelastic demand
Demand curve
Q QUANTITY
TAX REVENUE FOR GOVERNMENT
Typically, an increase in taxation is aimed at reducing the consumption of a particular good
or service through increasing the price of a particular good or service. Similarly, the Australian
government revenue is likely to increase due to then increase in the excise duty imposed on
tobacco cigarettes. Essentially, an increase in taxation will reflect in an increase in the prices of
goods and services thus increased government revenue in the short term and the medium term
(Scutt ,2015).However, taxation might affect the quality and quantity manufactured thus
affecting the revenue for the government, In the event that tobacco manufacture reduces due to
higher excise duties, there will be reduced government revenue from tobacco manufacturers.
Subsequently, the revenue might vary depending on the quantity produced and consumed thus
the likelihood to vary the revenue collected from the excise duty tobacco cigarettes (Thomas,