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Minimum Unit Pricing (MUP) for alcohol was introduced in Ireland in early 2022 - Leaving Cert Economics - Question 3 - 2022
Question 3
Minimum Unit Pricing (MUP) for alcohol was introduced in Ireland in early 2022. Under the new measures, a standard bottle of wine (750ml) cannot be sold for less tha... show full transcript
Worked Solution & Example Answer:Minimum Unit Pricing (MUP) for alcohol was introduced in Ireland in early 2022 - Leaving Cert Economics - Question 3 - 2022
Step 1
Do you agree with this new MUP for alcohol?
Answer
I disagree with the Minimum Unit Pricing (MUP) for alcohol.
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Inequitable Impact: The implementation of MUP is inequitable as it disproportionately affects those on lower incomes. Higher prices on alcohol may deter responsible consumers while failing to curb consumption among those who are dependent.
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Cross-Border Shopping: MUP could lead to increased cross-border shopping. Consumers may seek cheaper alternatives across borders, negatively impacting local businesses and local economies.
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Unnecessary State Interference: The policy represents unwarranted state interference in personal decision-making. Individuals should retain the autonomy to manage their own consumption habits without excessive government intervention.
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Effects on Hidden Economy: As prices rise due to MUP, some consumers may turn to the hidden economy for cheaper alternatives, which can lead to a loss of tax revenue and limit the effectiveness of MUP as a control measure.
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Switch to Alternative Drugs: When alcohol is priced out of reach, individuals might switch to alternative substances, which could result in even more significant social and health issues.
Step 2
Explain this statement using an example to illustrate your understanding.
Answer
Market failure occurs when the price mechanism in the free market leads to an inefficient or inequitable allocation of resources.
The consumption of alcohol often leads to negative externalities. For example, excessive alcohol consumption can result in healthcare costs for individuals with alcohol-related health issues, which are often borne by society through taxpayer-funded healthcare systems. Moreover, harms related to drunk driving or public disturbances also impact the community. This signifies a market failure where the true cost of alcohol consumption is not reflected in its market price, leading to overconsumption and associated societal harms.
In this context, while MUP aims to mitigate such issues, it could also push consumers to seek alcohol from unregulated sources, further complicating the challenge of addressing alcohol-related harms.