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Name:____________________________
Civics Group:_________________
Other comments:
You may include suggestions to improve on policys effectiveness here
Costs, Benefits
MSC = MPC + MEC
MPC (after tax)
MPC
C
B
Deadweight*loss*
MPB = MSB
0
QS
QP
Output level
Over%consump- on.
Deadweight*loss*
MPB = MSB
0
QS
QP
Output level
Over%consump- on.
Appendix #5: Effectiveness of direct regulation (age limit and legal regulations to restrict imported
cigarettes)
Worksheet 1: Assessment on the effectiveness of government intervention to correct
market failure
Source of market failure:
Negative externalities in consumption of cigarettes
Policy to be assessed:
Direct regulation legislation by setting age limit and regulations to restrict imported cigarettes
How the policy works:
(include diagram, if necessary)
- This is a form of direct regulation using legislation that aims to restrict the consumption of
cigarettes to the socially optimum level
- These methods have been effective thus far to directly reduce the consumption of
cigarettes, and limit the availability of the good in the market
Costs, Benefits
MPC = MSC
C
Deadweight*loss*
A
B
D
QP
QS
Output level
Subsidy of AD
- Cost of production
- Price of health check
- MEB is internalized in the form
of lower prices for health check
- MPB by the per unit subsidy
(MEB) amount
- Private equilibrium will now be
at point A
- Society now consumes at Qs,
socially
optimum level
- Deadweight loss is eliminated
Under&consump- on.
Appendix #7: Effectiveness of regulation to allow the use of Medisave for health check-ups
Worksheet 1: Assessment on the effectiveness of government intervention to correct
market failure
Source of market failure:
Positive externalities in consumption of health check-ups
Policy to be assessed:
Direct regulation legislation to allow the use of Medisave for health check-ups
How the policy works:
(include diagram, if necessary)
- This is a form of regulation to lower the perceived MPC (in monetary terms) for the
consumption of health check-ups
- It is aimed at increasing the consumption of health check-ups by society to the socially
optimum level