External effects and the government intervenes

Economics
External effects
Excise duty
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Slide 1: Slide
EconomieMiddelbare schoolvwoLeerjaar 3

This lesson contains 10 slides, with interactive quiz and text slides.

time-iconLesson duration is: 30 min

Items in this lesson

Economics
External effects
Excise duty

Slide 1 - Slide

External effects
A side-effect of the market (consequence of the supply or demand for which nobody pays)

External effects Aviation:
  • Noise
  • Pollution--> CO2 emissions
  • Effects the health of citizens near the airport (negatively)

Slide 2 - Slide

What is a good example of an external effect
A
Fertilisers used by farmers polute ground water
B
Syrup waffle bakers sell leftovers for € 0.25
C
Cinemagoers enjoy the beatifull images of the film
D
A disco offers local residents half-price entry tickets

Slide 3 - Quiz

The government intervenes
Excise duty = tax on products that cause external effects

Alcoholic drinks (diseases/ domestic violence --> health costs)
Sigarettes (diseases --> health costs
Petrol (CO2 emissions, polution)

Slide 4 - Slide

The excise tax is the difference between the two supply curves: $ 4
Calculate the change in total consumption of a bottles of rum as a percentage 

Slide 5 - Slide

The change as a percentage:
(new-old)/old X 100 %
(400 - 500)/500 X 100 % = 20 %. Calculate the total tax revenue

Slide 6 - Slide

 Calculate the total tax revenue
$ 4 X 400 = $ 1,600

Slide 7 - Slide

 Government has reached it's goals:
Increase in price of 40 %
Decrease in consumption of 20 %
Tax revenue can be used for treatment and prevention of abuse of alcohol

Slide 8 - Slide

Other means of intervention: road tax
People who have cars that are environmentally friendly pay less road tax (electronic cars 0 %)

Owners of cars that are environmentally unfriendly pay more road tax

Slide 9 - Slide

Do
Exercise 3 - 8 section 2         or:
som2day -->
economie -->
malmberg link leerling licentie -->
Chapter 6
Section 2
Test je zelf

Slide 10 - Slide