UK plans for minimum alcohol price

Binge Drinking is a term used to describe people who drink too much, too quickly to get drunk as fast as possible.

It has become a big problem in the UK where many people feel that alcohol is now too cheap.

This means that people are able to afford to binge drink, which then results in anti-social behaviour and damages their health.

Englands chief medical advisor, Sir Liam Donaldson has said that the UK Government should set a minimum price on alcohol.

Watch this BBC video on the idea and then answer the following questions:

1) How much does alcohol related illness cost the UK taxpayer each year?

2) How would the price of each bottle of wine be calculated?

3) If this plan was made law by the UK Government, what estimated percentage change in demand for alcohol is predicted?

4) Use a suitable economic theory to explain the effect of a minimum e price on alcohol. Use a suitable diagram to support your explanation.

5) Who is in favour of the minimum price, and who is against it?

6) Is alcohol Price elastic or price inelastic? Justify your answer based on the information in the video.

7) What social costs and social benefits can identify if the plan for a minimum price on alcohol is made into a UK law.

Go-ahead for new Heathrow runway

This BBC article covers the recent decision by the British Government to allow a 3rd runway at the London’s Heathrow airport – the world’s busiest airport. This article is a good example of how economists measure the true cost of production.

1) What are private costs and private benefits? What are the private costs and private benefits in creating a 3rd runway?

2) What are external costs and external benefits? Which external costs and external benefits can you see in this article?

3) Based on your findings – should the 3rd runway be built (hint – have you identified all social costs and social benefits in the article?)