Assume the government wishes to reduce alcohol consumption by
considering a higher excise tax on
alcohol products. Collect information on estimates for the price
elasticity of demand for alcohol
products. Based on these elasticity estimates illustrate using a
demand/supply diagram(s) who bears
the burden of the higher excise tax, consumers or producers.
As an alternative for reducing alcohol consumption assume the
government is also considering the
imposition of a minimum price on alcohol products. Using a
demand/supply diagram illustrate the
consequences of imposing a minimum price on alcohol for the
consumption of alcohol products.
Provide comment on the relative merits of increasing excise taxes
compared to imposing a minimum
price on alcohol products for reducing alcohol consumption.