Tag: social efficiency

2008 may yet come to be seen as the year that marks the death of the single-use plastic bag. Many countries around the world, including China, have banned their use and February 2008 has seen Marks and Spencer announcing a 5p charge per plastic bag in an attempt to reduce their usage. Even government departments have faced criticism over their use as promotional tools. For more details on plastic bag bans and policies relating to limiting their usage, see our 2007/8 podcast on The economics of plastic bags elsewhere on the site.

M&S hopes to cut plastic bag use with 5p levy Guardian (28/2/08)
Brown may legislate against free plastic bags Guardian (29/2/08)
Q&A: Plastic bags Guardian (28/2/08)
M&S to charge 5p for carrier bags BBC News Online (28/2/08)
Brown threatens supermarkets over plastic bag reduction Times Online (29/2/08)
Government accused over plastic bag waste Guardian (29/2/08)
Agency scraps use of plastic bags for Whitehall promotions Guardian (1/3/08)
Plastic bag bans around the world BBC News Online (28/2/08)

Videos
M&S to charge for carrier bags BBC News Online (February 2008)
M&S boss on plastic bags BBC News Online (February 2008)
M&S to start charging for plastic bags BBC News Online (February 2008)

Questions

1. What are the social costs and benefits resulting from the use of single-use plastic
bags?
2. Using diagrams as appropriate, show how the equilibrium price and quantity of plastic bags differs from the social optimum.
3. Evaluate two possible policies that the government could use to reduce the use of plastic bags.

Shell have announced record profits of $27bn. This is the highest profit ever made by a European company and is only surpassed worldwide by the annual profits of another oil company ExxonMobil at $40bn. These high profits have led to calls for a windfall tax to be imposed on the oil companies and the articles below consider the likely impact of a tax of this nature.

Threat of windfall tax to energy companies is ‘legalised piracy’ Times Online (28/2/08)
Tax uncertainty a sure-fire killer Times Online (28/2/08)
Q&A: Windfall tax on Shell BBC News Online (31/1/08)
The great fuel folly Guardian (5/2/08)

Video

Windfall tax suggested for fuel profits BBC News Online (February 2008)

Questions

1. Using diagrams as appropriate, show the impact on the equilibrium level of price and output of Shell of a windfall tax being imposed on their profits.
2. Discuss the extent to which the high level of profitability of oil companies is determined by the oil price.
3. Analyse whether a windfall tax is an economically efficient form of taxation. What alternatives could a government consider that might be more efficient?

In the article below, Ashley Seager from the Guardian argues that the government is doing little to encourage the take-up and adoption of alternative forms of energy generation for households. Indeed he argues hat the situation has got worse and not better in recent months with changes in the system. Only 270 houses were helped with the fitting of photovoltaic systems last year. In Germany the equivalent figure was 130,000.

Reasons to see red over green energy Guardian (18/2/08)

Questions

1. Assess the external costs and external benefits resulting from installing a photovoltaic electricity generation system on a house.
2. Using diagrams as appropriate, show how the installation of photovoltaic cells on houses will alter the socially optimal market equilibrium.
3. Evaluate two policies that the government could use to encourage the more widespread adoption of alternative methods of generating power.

With oil prices over $100 a barrel and petrol prices over £1 per litre, it is difficult to imagine a county where the entire tank of a 4×4 can be filled for 42p, but Venezuela is just such a country. Not surprisingly, Venezuelans are resisting any attempt to change the level of subsidy that creates this situation.

Cheap and cheerful: Venezuelans cling for right to petrol at 42p a tank Guardian (18/1/08)

Questions

1. Using supply and demand diagrams as appropriate, show the impact of the Venezuelan fuel subsidy on the equilibrium price of petrol.
2. Assess the impact on economic efficiency of a subsidy on this scale.
3. Discuss the impact on the socially optimal equilibrium level of output of the Venezuelan fuel subsidy.