Business Economics: Level Of Alcohol Assessment Answer

Analysis

It is true that, in current, alcohol consumption or abuse is a major subject of fear to all over the world.  The government should increase the tax on alcohol in order to reduce alcohol abuse in an effective way. In other words, it can be said that, raising the tax on alcohol is the most effective way to reduce alcohol abuse in our society. It is because of increased tax will increase alcohol prices. If there will an increase in the alcohol prices then it will also influence the demand and supply of alcohol in a negative way (Voon, Mitchell and Liberman, 2014). According to the economic theory, if demand of a product or service will increase then the supply of the product will also increase in an automatic way. Apart from this, if there is a decrease in the demand of a product or service then there will also be a decline in the supply of the product. Moreover, the below given graph is helpful in order to understand the effect of supply and demand on each other:

(Source: Hubbard, Garnett, Lewis and O'Brien, 2014)

In addition to this, increased alcohol taxes are linked to the decreased level of alcohol consumption and related injuries. The research shows that if there will a 10% increase in alcohol prices then there will be 3-10% decrease in overall consumption of alcohol (Reynolds, 2011). Moreover, according to WHO and IOM, increased alcohol tax is a major and effective health intervention that would be helpful in order to reduce excessive alcohol consumption and alcohol abuse in an effective and a more comprehensive manner. Along with this, the study show that, increased alcohol taxes are linked with decreased overall alcohol consumption & abuse, decreased mortality from liver cirrhosis, reduced alcohol & drinking related motor-vehicle accidents, and so on (Doran, Byrnes, Cobiac, Vandenberg and Vos, 2013). For that reason; it can be said that, raising the tax on alcohol is the most effective way to reduce alcohol abuse effectively.

On the basis of the above discussion, it is clear that the price of a product or service have an effect on the demand and supply of that product. Moreover, it is also assumed that, increased tax will raise the alcohol prices and this will decrease the demand as well as supply of the alcohol. In this way, raising the tax on alcohol would be the most effective way to reduce alcohol abuse in our society.

Introduction

In the business economy, absolute advantage and comparative advantage are two important aspects that influence the international trade widely. Moreover, both absolute advantage and comparative advantage deals with the production of goods as well as services. Along with this, these both aspects are helpful for the business organizations; so they can produce particular goods and products with the help of limited resources at a lower cost. This paper is helpful in order to simplify the difference between absolute advantage and comparative advantage in an effective and a more comprehensive manner.

Analysis

Absolute advantage and comparative advantage are two major concept of the economy. There are a lot of differences that make them differ from one another. For case, absolute advantage refers as the ability of producer to produce more products by making use of less available resource than other producer (Baumol and Blinder, 2010). In contrast, comparative advantage refers as the aptitude of a producer to create a specific product or service at a lower marginal as well as opportunity cost in comparison another producer or firm. Apart from this, absolute advantage puts forward a valuable assessment or evaluation of the productivity of different producers and business firms. The absolute advantage is favorable for those producers who are enthusiastic to use a little quality of inputs to fabricate goods and services. In contrast, comparative advantage improves the skill of producer to construct a particular product or service at lower opportunity cost (Wang and Carayannis, 2011).  

On the other hand, the other difference is that absolute advantage is not mutually beneficial for the makers; even as comparative advantage is mutually beneficial for the producers of products and services. Moreover, a country will make use of absolute advantage when it will make more products with the help of limited resources. In contrast, if a nation is willing to take advantage of lower opportunity and marginal cost then it will definitely make use of comparative advantage in order to produce goods and service (Hall and Lieberman, 2012). In addition to this, absolute advantage points out that which nation is best in order to produce goods and services by using limited resources. But, comparative advantage indicates that which nation is best to produce goods and services by making use of lower opportunity cost. Furthermore, at what time, a nation may produce a product at a superior quality and more rapidly than other nation then the nation has absolute advantage. In opposite to this, if a nation has a lower opportunity cost than other nation in order to make a product then that nation has comparative advantage (Hubbard, Garnett and Lewis, 2012). In this way, it can be said that, there are lots of differences between absolute and comparative advantage.

Conclusion

On the basis of the above analysis, it can be said that, both absolute advantage and comparative advantage are beneficial for the business firms. Both improve the abilities of the businesses; so they can produce goods or services at lower cost by using available resources.

References

Baumol, W. J. and Blinder, A. S. (2010). Macroeconomics: Principles and Policy. USA: Cengage Learning.

Doran, C. M., Byrnes, J. M., Cobiac, L. J., Vandenberg, B. and Vos, T. (2013). Estimated impacts of alternative Australian alcohol taxation structures on consumption, public health and government revenues. Med J Aust, 199(9), 619-622.

Hall, R.E. and Lieberman, M. (2012). Microeconomics: Principles and Applications. USA: Cengage Learning.

Hubbard, G., Garnett, A. and Lewis, P. (2012). Essentials of Economics. Australia: Pearson Higher Education AU.

Hubbard, R.G., Garnett, A.M., Lewis, P. and O'Brien, A. P. (2014). Macroeconomics. Australia: Pearson Australia.

Reynolds, C. (2011). Public Health and Environment Law. Australia: Federation Press.

Voon, T., Mitchell, A. and Liberman, J. (2014). Regulating Tobacco, Alcohol and Unhealthy Foods: The Legal Issues. Australia: Routledge.

Wang, V.W.L. and Carayannis, E.G. (2011). Promoting Balanced Competitiveness Strategies of Firms in Developing Countries. Australia: Springer Science & Business Media.