Principles of Economics

Principles of Economics Name: Instructor: Course: Date:  As an economist, assuming that the people abusing alcohol are rational people is the only way to finding the solution. The best way to deal with the problem would be to come up with ways of controlling the problem by correcting it (Geithman, 1997). This way the economist is able to eliminate a myriad of possibilities that could be leading to the abuse of the alcoholic products. This will help him/her to focusing the solution to one single problem by assumption. It would also mean that all the subjects are treated with the same standards. To control how much alcohol is consumed within any given time and space, with all the factors held constant, increasing the prices of the alcoholic beverages would have the best result. This could start at the level of production where the manufactures are charged much more tax, that is then passed on the consumers as direct tax (Stonebraker, 2013). The alcoholic products will in turn become expensive, as such; few people will afford the beverages and those who do, will not overly indulge, as it is expensive. By extension, the people will examine the marginal benefits versus the marginal costs that they are incurring taking the drinks, to make the decision and cut down their losses. The other way an economist would deal with alcohol abuse, would be through incentives. In this case, the economist would suggest use of incentives that are discouraging to the alcohol users. This could mean using adverts that illustrate alcohol drinking as a bad habit as opposed to the common hype associated with drinking alcohol (Stonebraker, 2013). Prescription drugs are produced using raw material such as chemicals and equipments that are sometimes also used in the production of other goods. Their production also uses services that are common in the productions processes of other goods. As such, when the demand of a certain drug increases by a certain percentage, the raw materials used in the manufacture of that drug are bound to shoot up as well. This will lead to the increase in the demand of the raw materials as more drugs are produced and bought at the counter (Geithman, 1997). The raw materials shared to make drugs and other goods will in turn increase the price of these other goods. Services that are complementary to the manufacture of drugs and other goods will also increase in demand and as a result increase in price. All the complementary goods such a packaging material that are used with the drugs will also experience the rise in the demand. As the demand of the products rises, so will the supply increase along with the demand. When looking at the demand and supply of a good or service, the price is ...