| i | This is the website of Dr Emilie J. Rutledge who, with almost two decades’ worth of experience in managing, designing and delivering university-level economics courses, is currently Head of the Economics Department at The Open University.
 erutledge.com  Dr Emilie J. Rutledge Emilie has published over 20 peer-reviewed papers and is the author of “Monetary Union in the Gulf.” Her current research focus is on employability, the feasibility of universal basic incomes and, the oil-rich Arabian Gulf’s economic diversification and labour market reform strategies. On an ad hoc basis, Emilie provides consultancy on developing interactive university courses, alongside analytical insight on the political-economy of the Arabian Gulf. |
Economic concepts: Price Elasticity
In this exercise, we will consider and calculate how the theory of Price Elasticity of Demand (PED) can feed into a Cost-Benefit Analysis (CBA). We will use the UK tobacco tax policy as a real-world case study with a range of questions that require the use of MS Excel:
Economics-in-Practice-DD226–Task-by-Emilie-Rutledge.pdf
— Background context & questions
Tobacco_Tax_Activity.xls
— Three worksheets
On this page you will find the following information:
01. — Demand curves, different elasticities
02. — Cost-Benefit Analyses
03. — Selected references
— § § § —
01. — Demand curves, different elasticities
01. — Demand curves, different elasticities
02. — Cost-Benefit Analyses
03. — Selected references
Demand curves: different elasticities
Demand curve: unit elasticity
Demand curve: inelastic
Demand curve: elastic
Demand curve: positive elasticity
Price Elasticity of Demand: an example
Using PED: the maths
— § § § —
02. — Cost-Benefit Analyses
01. — Demand curves, different elasticities
02. — Cost-Benefit Analyses
03. — Selected references
Cost-Benefit Analysis (CBA)
CBA example:
— § § § —
03. — Selected references
01. — Demand curves, different elasticities
02. — Cost-Benefit Analyses
03. — Selected references
ASH, & UKTAS. (2020). HM Treasury Budget 2020 Representation from ASH and the UK CEntre for Tobacco and Alcohol Studies to the Chancellor of the Exchequer. Retrieved, https://ash.org.uk/wp-content/uploads/2020/01/ASH_UKCTAS_Budgetsubmission2020FINAL.pdf
Atkins, G., Davies, N. &, Bishop, T. (2017). How to value infrastructure, improving cost benefit analysis. Institute for Government. Retrieved, https://www.instituteforgovernment.org.uk/publications/value-infrastructure-september-2017
Cavaglieri, C. (2020, 11 March 2020). Budget 2020 tax on alcohol frozen but smokers will pay more. Retrieved, https://www.which.co.uk/news/2020/03/budget-2020-sin-taxes-on-alcohol-frozen-while-smokers-will-pay-more-for-tobacco/#:~:text=Following%20the%20Budget%2C%20duty%20rates,packet%20of%20hand%2Drolling%20tobacco
Cullum, P., &, Pissarides, C. (2004). The demand for tobacco products in the UK. London: Government Economic Service.
Office for National Statistics. (2019). Adult smoking habits in the UK: 2018. Retrieved, https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/bulletins/adultsmokinghabitsingreatbritain/2018#characteristics-of-current-cigarette-smokers-in-the-uk
Reed, H. (2010). The effects of increasing tobacco taxation: A cost benefit and public finances analysis. Retrieved, http://tobacco.cleartheair.org.hk/wp-content/uploads/2011/06/ASH_722.pdf
Townsend, J. (1996). Price and consumption of tobacco. British Medical Bulletin, 52(1), 132-142. doi:10.1093/bmb/ldw011
UK Government (2009). Annex 2—Briefing note: Economic aspects of aviation, The future of aviation – Transport Committee Contents. UK Parliament. Retrieved, https://publications.parliament.uk/pa/cm200910/cmselect/cmtran/125/12513.htm
WHO. (n.d.). Report on Tobacco Taxation in the United Kingdom. World Health Organisation. Retrieved, https://www.who.int/tobacco/training/success_stories/en/best_practices_united_kingdom_taxation.pdf?ua=1