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
| This website is maintained by Dr Emilie J. Rutledge, an Associate Professor of Economics and author of Monetary Union in the Gulf: Prospects for a Single Currency in the Arabian Peninsula. Emilie has developed a number of undergraduate and postgraduate courses that specifically cover the economic and sociopolitical trajectories of the six Gulf economies. Her present research interests are the Arabian Gulf’s labour market dynamics and economic diversification endeavours. Biography Publications Consultancy  erutledge.com  Dr Emilie J. Rutledge |