The government recently shelved a proposal for a minimum unit price for alcohol. As part of this assignment, I will examine the economic theories behind the decision, such as demand, supply, and elasticity. Alongside this, I will discuss the likely economic effects that a minimum price on alcohol could have. First, I should look at the elasticity of alcohol with respect to a person's income shown in Figure 1. From this diagram, it is clear that alcohol consumption has increased. of 5 liters between 1960 and 2000. It's like in 1960, you see that the average price of alcohol, in relation to their income, would be around 220 units, which leads to a consumption of 6 liters of alcohol by an average person. Compared to the year 2000, when the price of alcohol relative to income is now around 90 units, this drop in price has led to an increase in liters of alcohol consumed by the average person to around 11 liters . This shows that the more alcohol a person can afford, the more they will drink. Figure 1: Alcohol consumption relative to income. (Publication to Parliament 2010) This suggests that a minimum price on alcohol would reduce health problems and combat alcoholism. I will now examine the health costs associated with alcohol consumption. Alcoholism can lead to many problems such as high blood pressure, stroke, coronary heart disease and liver cirrhosis. Figure 2 Liver cirrhosis in relation to alcohol consumption. (Publication to Parliament 2010) This graph shows a clear correlation between cases of cirrhosis and the amount of alcohol consumed in a country. Countries that tend to...... middle of document ...... have drawn this conclusion because there is not enough evidence to implement this policy.BibliographyParliament. (2013). Prices: taxes and minimum prices. Available: http://www.publications.parliament.uk/pa/cm200910/cmselect/cmhealth/151/15114.htm. Last accessed 11/19/2013. Boseley, S. (2013). Minimum unit price for a set aside alcohol proposal. Available: http://www.theguardian.com/society/2013/jul/17/minimum-unit-price-alcohol-shelved. Last accessed 11/19/2013. House of Commons Briefing Paper (2013): A minimum price for alcohol? House of Commons Library Note SN/HA/502. Available: www.parliament.uk/briefing-papers/commons-standard-notes/health-services-and-medicine/alcoholism/2013Drink Aware. (2013). Alcohol addiction. Available: http://www.drinkaware.co.uk/check-the-facts/health-effects-of-alcohol/mental-health/alcohol-dependence. Last access 19/11/2013