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Source: Green, K. (2022, December 15). Ending half-price fares risks gains in changing transport behaviour - advocates. Radio New Zealand. https://www.rnz.co.nz/news/national/480778/ending-half-price-fares-risks-gains-in-changing-transport-behaviour-advocates
Use the labels from Graph One to identify the:
change in consumer surplus
change in producer surplus
total cost of subsidy
deadweight loss
The effectiveness of the subsidy in encouraging more people to use public transport depends on the price elasticity of demand.
Refer to Graph One and the resource material in your answer to part (b).
Compare and contrast how the subsidy impacts consumers and producers. In your answer, explain the price elasticity of demand of public transport, and why it influences the extent of these impacts.
Explain how the subsidy impacts the Government, and its plan for emissions reduction.
Explain how the subsidy impacts allocative efficiency, and why this change in efficiency occurs.
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Source: Checkpoint. (2022, April 14). New research reveals dangers of vapes, e-cigarettess. Radio New Zealand. https://www.rnz.co.nz/national/programmes/checkpoint/audio/2018838310/new-research-reveals-dangers-of-vapes-e-cigarettes
To minimise the number of people taking up vaping, particularly young people, the Government could restrict the number of retailers selling vaping products.
Graph Two shows the market for vaping products at equilibrium, with equilibrium price (Pe) and equilibrium quantity (Qe).
Complete Graph Two above by:
How would equilibrium be restored in the market for vaping products following a decrease in retailer numbers? Refer to the relevant labels from Graph Two and the concept of market forces in your detailed explanation.
Another possible intervention is for the Government to impose an indirect tax on vaping products.
Graph Three shows the market for vaping products at equilibrium, with equilibrium price (Pe) and equilibrium quantity (Qe).
Complete Graph Three above by identifying and labelling the new equilibrium price (P2) and quantity (Q2) as a result of an indirect tax.
Use the numbers from Graph Three to complete Table One, below.
Refer to Table One above and Graphs Two and Three in your answer to part (c).
Compare and contrast the impact of the two interventions on allocative efficiency and the Government’s aim of discouraging the consumption of vaping products.
In your answer explain why:
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Source: Life Education Trust.(n.d.) What am I drinking? Life Education Trust. https://www.lifeeducation.org.nz/in-schools/resources/599?page=1&search
To limit the consumption of energy drinks, the Government could impose a quota limiting the quantity bought and sold to 3 million cans a year.
Graph Four shows the market for energy drinks at the original equilibrium with equilibrium price (Pe) and equilibrium quantity (Qe), and the new equilibrium price (Pq) and quantity (Qq) as a result of the quota.
On Graph Four above, show the impact of the quota by shading in the:
The Government could also discourage consumption of energy drinks by implementing a minimum price control.
Graph Five shows the market for energy drinks at the original equilibrium with equilibrium price (Pe) and equilibrium quantity (Qe), and the new equilibrium price (Pmin) and quantity (Qmin) as a result of a minimum price control set at $4.50 per can.
On Graph Five above, show the impact of the minimum price by shading the:
Complete Table Two below by calculating the values from Graph Four and Graph Five.
Refer to Graphs Four and Five and Table Two in your answer to part (b).
Explain in detail the impact the quota and minimum price control might have on the following:
Consumer surplus
Producer surplus
Allocative efficiency