The government recently shelved a proposal for a minimum unit price for alcohol. For the purpose of this assignment I will examine the economic theories underlying the decision such as demand, supply and elasticity. Along with this I will discuss the likely economic effects that a minimum price on alcohol could have. First I should consider the elasticity of alcohol with respect to a person's income, shown in figure 1. From this diagram it is clear that alcohol consumption increased by 5 liters in the period between 1960 and 2000. This is because in the 1960 it is discovered that the average price of alcohol, relative to income, would be approximately 220 units, which leads to 6 liters of alcohol consumed by the average person. This compares to 2000, when we see that the price of alcohol relative to income is now around 90 units, this decrease in price has resulted in the liters of alcohol consumed by the average person rising to around 11 litres. This shows that the more alcohol a person can afford, the more alcohol they will drink. Figure 1: Alcohol consumption in relation to income. (Published in Parliament 2010) This suggests that a minimum price for alcohol would be successful in reducing health problems and tackling alcoholism. I will now examine the health costs associated with alcohol consumption. Alcoholism can lead to many problems such as hypertension, stroke, coronary heart disease and liver cirrhosis. Figure 2 Liver cirrhosis in relation to alcohol consumption. (Publication in Parliament 2010) From this graph we can see a clear correlation between cases of cirrhosis and the quantity of alcohol consumed within a country. Countries that tend to...... half of the document ...... have come to this conclusion because there is insufficient evidence to apply 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 alcohol proposal set aside. 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 seen 19/11/2013