Dubai International Academy
Economics DP Internal Assessment
Candidate’s name:
Nishant Bhushan
Candidate number:
Teacher:
Ms. Reena TIkku
Source of the Article: http://news.yahoo.com/dietary-guidelines-panel-advises-policy-changes-soda-tax-215222455--politics.html?soc_src=mail&soc_trk=ma Title of the Article:
Dietary guidelines panel suggests tax on sugary foods
Date of Article:
February 20th 2015
Date Commentary Written:
16/03/15
Word Count (maximum of 750):
714
Commentary Number:
1
Commentary relates to ticked section of syllabus:
Section 1: Microeconomics
Section 2: Macroeconomics
Section 3: International economics
Section 4: Development economics
I certify that the attached work is mine alone and that information from other sources is properly referenced:
Tax on Sugary Foods
This article talks about how obesity is a big problem in America and how the American government have introduced a ‘Fat tax’ to counter this situation.
Market Failure occurs when there is an inefficient allocation of resources in a free market. Market failure can occur due to a variety of reasons, such as negative externalities (over-consumed) or demerit goods (usually not provided in a free market).
Negative Externalities are defined as the external costs incurred by third parties. They are the negative spillover effects borne by the society and not producers or consumers. Demerit goods are an example of goods that lead to negative externalities. Demerit goods are goods that incur social costs and are over provided and over produced by firms and the government discourages its distribution. Eg. Cigarettes and alcohol.
Sugary Foods is an example of negative externalities of consumption, where the consumption of the product causes the Marginal Social Benefit product to be much less than the Marginal Private Benefit. Marginal Private Benefit is the benefit received by the consumer by consuming one extra unit of the