Principles of Economics



Principles of Economics

Economist approach towards the problem of alcohol abuse

The economy is responsible for analyzing the major processes of a country's macroeconomic, behavior and the main determinants of real variables (e.g., employment, production) and monetary (e.g., inflation and exchange rate), but also a part very important to the economy is devoted to analyzing human behavior. The economic literature on addiction and alcohol abuse can be classified into two groups: one that starts with a model of rational behavior and that which is based on non-rational models. Rational behavior models assume that individuals have a consistent plan to maximize their well-being throughout life (Krugman & Wells, 2006).

Rational models have been widely used not only to understand human behavior, but also to identify the determinants and forecast growth rates of countries. Models do not argue that rational decisions are primarily impulsive people. Information on the possible damage associated with alcohol abuse it can have important effects on demand for those goods. So, according to economist people in deciding their consumption plan, taking into account the short-term benefits and long-term costs, information on possible damage causes the second element has greater weight.

How prescription drugs affect the demand and supply of other products and services

The economic model of demand and supply of prescribed drugs suggests the interesting implications that help us understand the addictive substance. Perhaps the main conclusion is that addictions depend on the combination of different people with different addictive substances, a relationship that may be affected by external circumstances, such as prices and demand. A change in prices will affect demand, present and future of the prescribed drugs, so a price increase will tend to reduce consumption over time, while a decrease will tend to increase in all periods (Fisher, 2007).

Moreover, the price effect on demand will be more important if the price change is permanent and not temporary. That is, demand within the prescribed drugs has the same properties as any other property (Fisher, 2007). If the price paid by the individual for his addiction down, it is likely to increase current consumption of the addictive good. For example, if drugs are developed to reduce the risk of death due to cardiovascular diseases associated with obesity, more people are likely to become addicted to food, thus increasing the demand of the product (Frank & Bernanke, 2001).

Why the elasticity of demand and Supply is an important consideration ...