Question

Smoking has long been established to be bad for a person’s health. It has an adverse impact upon both the smoker,as well as those who breathe in second hand smoke. In order to reduce smoking rates the Australian Government introduced plain packaging laws in 2012. As a result cigarette packages all look the same, and are covered in graphic images associated with the health problems caused by smoking.

Select the item from the list provided to make the following statements true:

-       1.       2.       3.       4.       5.       6.       7.       8.       9.       10.       11.       12.    In addition to plain packaging the Government could reduce the amount of cigarettes sold through increasing __________ on cigarettes.       -       1.       2.       3.       4.       5.       6.       7.       8.       9.       10.       11.       12.    Cigarette butts are very hazardous for the environment. The decision by a shop owner to sweep up cigarette butts on the footpath outside their shop could be considered a __________ for the environment.       -       1.       2.       3.       4.       5.       6.       7.       8.       9.       10.       11.       12.    Banning smoking in public would be an example of the government using __________.

1. Negative externality 2. Positive externality 3. Tax 4. Subsidise 5. Command and control 6. Negotiate 7. Possible 8. Impossible 9. Private 10. Efficient 11. Inefficient 12. Social

Answer 1

(a)

In addition to plain packaging the Government could reduce the amount of cigarettes sold through increasing Tax on cigarettes.

[Negative externality is internalized by imposition of tax]

(b)

The decision by a shop owner to sweep up cigarette butts on the footpath outside their shop could be considered a Positive Externality for the environment.

(c)

Banning smoking in public would be an example of the government using Command and Control.