An Economists Response to the Alcohol Problem - 1005 Words

Economists Response to Alcohol Problem Alcoholism to the economist would be more than the effect it has on the immediate consumer. An economist would look at the problem from the perspective of its effects on the immediate family members and society as a whole. Economists will consider what are the extra costs (externalities) are likely to be incurred by the alcohol consumption to the immediate family and society? Externality refers to the costs associated to consumption or production of a commodity that would otherwise not be ADDIN EN.CITE Mullahy199028282817Mullahy, J.,Sindelar, J.An ounce of prevention: Productive remedies for alcoholismJournal of Policy Analysis and ManagementJournal of Policy Analysis and Management249-253921990. An economist will look at the cost of care incurred by the immediate family members, the likely cost of job loss, the cost of Medicare to the alcoholic, the likely road accidents associated with drunken driving and the cost to the government of providing social amenities to care for the alco holics (example: rehabilitation centers and other medical care). A measure to correct the problem of alcoholism is to levy a tax assuming that the alcohol consumer are rational and will respond to the disincentive. This tax was named after its proponent Arthur Pigou Pigovian tax. The Pigovian tax is levied on market activities that produce extra negative cost unaccounted for in the production. The tax is assumed will increase the cost of consumingShow MoreRelatedAre People Rational Essay3367 Words   |  14 PagesEveryday people make decisions that affect themselves and other parties. This essay will discuss if people are rational and if people are reasonable. In particular will be focusing on whether people are rational in the economist’s sense, and, reasonable in the lawyer’s sense and whatever the outcome, does it matter? It is an important matter as peoples actions have effects, externalities on others, on third parties and it is significant to understand why people act the way they do and comprehendRead MoreThe Walt Disney Comp any and Disney Management25371 Words   |  102 Pagesbetween $340 and $380 a night. Financial losses became so massive at EuroDisney that the president had to structure a rescue package to put EuroDisney back on ï ¬ rm ï ¬ nancial ground. Many French bankers questioned the initial ï ¬ nancing, but the Disney response was that their views reï ¬â€šected the cautious, Old World thinking of Europeans who did not understand U.S.-style free market ï ¬ nancing. After some acrimonious dealings with French banks, a two-year ï ¬ nancial plan was negotiated. Disney management rapidly