Economics Assignment: Analyzing Plastic Packaging Impact on Business

This essay explores the increasing use of plastics in the packaging industry and its detrimental environmental effects, focusing on companies like GoodFor and Be Free Grocer that are promoting sustainable alternatives. It analyzes the types of plastics used, particularly high-density polyethylene (HDPE) in the food industry, and discusses how the market equilibrium for plastic-packaged food deviates from social equilibrium due to negative externalities. The essay also addresses the intergenerational impact, the role of government policies in reducing plastic use, and the shift towards decomposable materials, concluding that banning single-micron plastic bags is essential for ecological balance. The document is available on Desklib, a platform offering study tools and resources for students.

Running head: Economics Assignment
ECONOMICS ASSIGNMENT
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Economics Assignment
Introduction
The use of plastics in the modern business sectors is increasing and in the last 65
years, the use of the plastics in the recent packaging industry has increased by huge margin.
The growth of the plastic is increasing and is actually damaging the environment. In recent
times, one of the horror story that has been witnessed in the form of sea turtles are found with
hundreds of plastics in their guts. Moreover, most of the developed nations are fighting hard
for the shift in trend regarding the use of non-plastic materials for packaging. The study is
significant in the sense that it will highlight the pros and cons of using plastics and how
companies like GoodFor and Be Free Grocer are improving business.
Analysis
7%
28%
11%26%
17%
7% 5%
Types of plasics used in packaging
industry
PETE (Type 1) HDPE (Type 2) PVC (Type 3) LDPE (Type 4)
PP(Type 5) PS (Type 6) other (Type 7)
Figure 1: Types of plastics used in packaging industry
(Source: Cdn2.hubspot.net, 2019)
The above figure is showing the fact that type 2 and type 4 plastics are being used
intensively in the packaging industry. GoodFor Company is mainly dealing with selling of
organic herbs and spices and they are giving their customers liberty to bring any kind of

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Economics Assignment
containers they want to fill the goods and they are also giving options if the customers are
buying in bulk from online stores then the goods will be delivered in paper bags. In food
industry, the impact of plastic is having high significance. The main reasons behind the
incorporation of plastics in the food industry is that the packaging industry increases the
preservation of food items (Mbie.govt.nz, 2019). High-density polyethylene (HDPE) is in
high demand for most of packaging industry that has been used in the food industry. The
market equilibrium for plastic packaged food industry will deviate from social equilibrium as
the social marginal cost will be high compared to private benefit. This is because, the plastic
packaged food industry is having high negative externality for the environment.
Figure 2: Social cost and private benefit
(Source: Created by Author)
In the above diagram PMC is the private marginal cost and PMB is the private
marginal benefit. On the other hand, SMC is the social marginal cost and SMB is the social
marginal benefit. Since the plastics and polythenes that are used in the food packaging

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Economics Assignment
industry are non-degradable in nature and is creating negative externality within the
environment thus social marginal cost curve will be lying above the private marginal cost
curve. Since the market for the food products at the manufacturing level is perfectly
competitive market thus most of the companies are focussing on the packaging industry as
they are trying to capture the bigger sections of consumer market. In order to increase their
revenue base, most of the companies does not give focus on using better quality of raw
materials for the packaging of food products. Using paper bags will increase the cost of
production for most of the companies. Only the companies like GoodFor and Be Free Grocer
are looking to improve the trend of replacing plastic with paper and other degradable
materials.
Considering the sustainable development for the future generations the government of
most of the developed nations are looking to incorporate policies that will automatically help
the current generations in saving resources for the future generations. Most of marine
environment is getting degraded with the deposition of plastic bottles and plastic food
package into the sea (foodnavigator-asia.com, 2018). This is posing a threat to the human
environment as the marine animals are consuming them and in turn when human being are
consuming the marine fishes and all they all are consuming poison. Not only this many times
it has been seen that marine animals are getting severely injured as plastic straws sometimes
gets struck in the nose of small turtles.
Taking into account intergenerational effect on the valuation of the marginal social
costs, the young generation is only posing concern on the social media platforms but they are
not taking any kind of initiative to improve the environment. Most of the young generations
are not using proper garbage to dispose of the plastic wastes. The companies that are
manufacturing food packaging tools using plastics are not thinking of ways to inform public
regarding the disposition techniques (IFT.org, 2019). The cruise companies that are using the

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Economics Assignment
plastics for storing of foods for their passengers are throwing the plastics on the sea and they
are creating a layer on the seabed. This layer will restrict the incoming of oxygen and other
factors in the sea economy. This is actually damaging the ecological balance of sea life. On
the other hand, through the development of policies that will bring down the throw of plastics
in the sea. Most of the retail supermarkets have stopped using the single micron plastics that
were previously used for the carry bags purpose. Most of the companies in the New Zealand
are using paper bags and they are requesting the customers to purchase in bulk from the
online site. The New Zealand government is aiming to impose a ban on using plastic bags
that are below the standard level of 70 microns of thickness and about 50% of the consumers
are claiming the fact that they are using reusable bags (NZ, D., Industry, N., & Statistics, G,
2019). The government ban will exclude the light weight bags made from synthetic fibre that
has been mainly designed for long use purpose. Most of the retailers are claiming the fact that
if the government impose ban on the use of single micron plastic bags that will allow for the
safe development of environment.
Conclusion
The study has concluded that in order to increase the development of ecological
balance, the government should ban the use of single micron plastics bags. Retail companies
like GoodFor and Be Free Grocer are using the paper bags for the bulk orders that customers
are ordering from their online site. Moreover, it is important for the whole economy to
indulge the use of decomposable materials so that they do not pose any kind of threat to the
future generation.

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Economics Assignment
Reference list
‘Time to take action’: New Zealand single-use plastic phase-out will not affect fresh produce
barrier bags. (2018). foodnavigator-asia.com. Retrieved 22 May 2019, from
https://www.foodnavigator-asia.com/Article/2018/12/05/Time-to-take-action-New-
Zealand-single-use-plastic-phase-out-will-not-affect-fresh-produce-barrier-bags
Food Packaging -- Roles, Materials, and Environmental Issues - IFT.org . (2019). Ift.org.
Retrieved 22 May 2019, from http://www.ift.org/knowledge-center/read-ift-
publications/science-reports/scientific-status-summaries/food-packaging.aspx
NZ, D., Industry, N., & Statistics, G. (2019). General Statistics | Plastics New Zealand.
Plastics.org.nz. Retrieved 22 May 2019, from http://www.plastics.org.nz/doing-
business-in-nz/new-zealand-industry/general-statistics
Slade, M., Sergent, Fortune, & Junn. (2019). Out-of-packaging experience: The rise of the
plastic-free retailer. The Spinoff. Retrieved 22 May 2019, from
https://thespinoff.co.nz/business/12-03-2019/out-of-packaging-experience-the-rise-of-
the-plastic-free-retailer/
GoodFor – Wholefoods Refillery. (2019). Goodfor.co.nz. Retrieved 22 May 2019, from
https://goodfor.co.nz/
(2019). Cdn2.hubspot.net. Retrieved 22 May 2019, from
https://cdn2.hubspot.net/hubfs/3320613/New%20Zealand%20Plastic%20Packaging
%20System%20Report/SBN_New%20Zealand%20Plastic%20Packaging%20System
%20Report_FINAL_For%20general%20release.pdf?
__hssc=249356888.2.1543726718370&__hstc=249356888.0558b38efb5296741aaf09
ed115b7075.1537852084415.1543723315980.1543726718370.3&__hsfp=157063661

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Economics Assignment
9&hsCtaTracking=a2975b5a-62da-42bf-a241-35a089341d8a%7C867fb507-e29d-
4a92-84d8-7c018aa649f4
(2019). Mbie.govt.nz. Retrieved 22 May 2019, from
https://www.mbie.govt.nz/assets/f0f81b6194/new-zealand-manufacturing-sector-
report-2018.pdf
Be Free Grocer. (2019). Be Free Grocer. Retrieved 22 May 2019, from
https://www.befreegrocer.co.nz/