Question

Obesity in the US is causing increasingly dire public health outcomes including increases in diabetes and heart disease.

a. Under what circumstances can externality theory be used to justify government regulation designed to curb or reduce obesity. Explain.

b. Define an internality

c. How might you justify government regulation designed to curb obesity using this internality concept. Explain.

d. Finally, offer one policy proposal aimed at reducing the rate of obesity. What are the likely criticisms of your proposal and how would you defend it?

Answer 1

Obesity is the excess fat accumulation in ones body.It increases many health problems such as diabetes,heart diseases ,cancer,etc.

(a) government can discourage the negative externalities by taxing goods and services that generate spillover costs .government can encorage positive externalities by subsidising goods and services that generate spillover benefits.

when individuals bear the full costs and receives fill benefits of their own actions ,the justification for government involvement is weaker.

corrective taxes : inrease MPC to reduce supply and raises price.it leads to a smaller demand.

(b) INTERNALITY: It is a good or service that imposes acosts or benefit on an individua;l in the long run that is not taken into account when the individual consumes that goods or services

(c) government involvement to curb obesity is weaker.they should increase sin taxes on goods ,marketing restrictions ,mandatory savings and plans and so on.

(d) negative Advertising : raise awareness about the harms of a goods consumptions could help reduce demand

.many peoples where not ready to accept the consequences of obesity.not ready to accept the reality but through frequent awareness about the negative impact of obesity may work out in small percentage of people.

* regulations: government can regulate and limit the consumptions of goods that increases obesity.

the main choices is within the individuals who want to think about their health and fitness