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Principles of Economics - Essay Example

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Principles of Economics

Practically, it is very hard to model actions since there are so many distinct variables. The problem of alcohol abuse is not easily overcome because alcohol is highly addictive. In this case, if the alcohol abuser is an economist, he or she will consider many things that he or she would use to help him or her overcome the situation. They will look at the opportunity cost whereby they will consider buying those goods that are best for their health other than alcohol (Mantzavinos, 2001). Additionally, they will use cost benefit analysis by viewing the benefits accrued from stopping the habit of alcohol consumption which in this case out weight the disadvantages for example, wastage of money in purchasing alcohol (O'sullivan et al, 2011). More so, they will consider rational behavior by assuming which actions are necessary when they stop consuming alcohol. Lastly, an economist would look at the market forces of demand and supply of alcohol in that they will analyze the level at which alcohol is supplied to the market and the price that alcohol come with. When the supply is not sufficient, they would prefer to stop drinking alcohol rather than continuing with the habit of looking for a commodity that is scarce and costly. More so, they will consider the level at which alcohol is demanded; therefore, they will analyze the possible outcomes of many people drinking alcohol. The possible way to help alcohol abuser is to assist them to realize that they have alcohol consumption problem. Friends and family members can help make the abuser realize that drinking is affecting them by being specific in their discussion. In this manner, the abuser may be willing to look for assistance when they are faced with the harm their alcohol consumption causes to others. With the help of friends and family members, the abuser is likely to overcome the problem of alcohol drinking. Other groups such as Alcoholic anonymous help the abusers by giving the patients the chance to assist each other to avoid alcohol consumption. 2. Analyze how prescription drugs affect the demand and supply of other products and services in this country. Prescription drugs have direct inclination to the trends of supply and demand of goods and services in a particular state (Porter, 1998). The sectors that are most likely to be affected include; the beneficiaries which in this case are the patients, private insurers and to the extreme public policies. These effects are generally predisposed and become inevitable because of the rise in costs of these prescription drugs. Rise in costs of prescribed drugs connotes that the beneficiaries have to go an extra mile to settle their health bills. This may include outsourcing finances that were initially allocated for a different purpose. Cutting down allocations from a different sector in order to fill the health gap translates to low purchasing power from the deprived sectors. 3. Formulate a reason why the elasticity of demand is an important consideration when analyzing the impact of a shift in supply and why the elasticity of supply is an important consideration when analyzing the impact of a shift in demand. Include at least one (1) example in each scenario. Price elasticity of demand attempts to measure how price change affects the quantity demanded by the prevailing market condition. The formulae for determining the price elasticity is as shown below. Price elasticity (PEoD) = (percentage change in Quantity demanded)/ (percentage chang ...Show more

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Principles of economics Your name Institution Principles of economics 1. Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis…
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