Question

Economics Hypothetical Scenarios: Please Answer both of them thank you

1.a) Think about two people: a poor person and a rich person. Let each person have the
same nicotine habit (i.e. they consume cigarettes at the same rate) and suppose the
government imposes a tax on cigarettes to pay for health care, who is hurt more by
the tax? Why?

b)Assume that I have a doughnut, and you have a doughnut, and there is one doughnut
lying on the ground.
i) Is this efficient?
ii) If I just take the doughnut from the ground and cram it down my throat without
sharing it with you, is that efficient?
iii) If we fight over it, and smoosh half of it in the fight, is that effcient?

iv) if one of us agree to split half of it in the fight, is that efficient?
v) If a third party offers to split the doughnut fairly between us in exchange for a quarter of the doughnut is that efficient?

vi) If a third party forces us to split the doughnut fairly between us in exchange for a quarter of the doughnut is that efficient?

Answer 1

1) We can measure the usage of cigarettes only with the willingness nature of different income groups of people having rich and poor status. Knowing its dangerous nature, the two people wish to consume on the daily basis. It is the subjective part of economics that the consumption pattern does not change instantly as it deals with the choice and the preferences of such two people to buy cigarettes. Though the Federal Government instructs all the manufacturers to print a statutory warning in the cigarette's brand product, it can also have the administrative power to include the high margin of tax in the price by insisting the using customer's pay for the health care service. As economically sound, The Rich person will not have any monetary and tax burden. It will not affect his daily quantity of consumption. But the higher price will hurt the mindset of the other economically poor man who cannot able to bear the burden of a higher level of tax and the price. We infer the above fact that it bases the economical hypothetical nature which can judge the poor condition of the financially unsound person to buy the costly cigarette product due to psychological factors.

2) We can prefer the option v) If a third party offers to split the doughnut fairly between us in exchange for a quarter of the doughnut, is that efficient?

Answer:- We have three pieces of doughnut. Two people have their doughnut in their hands and other is on the ground. The scarcity of resources happens only when there is no fair distribution of sources. The existing sources may be in the form of land, food, water, clothes, and other basic amenities. In the above scenario, the third party can solve the problem by making equal sharing of doughnut between the two people with no controversy of having the full rights of eating doughnut alone. If the two people allow, the third party can also have one piece of share to hold it. It is the full stage of distribution of sources. There should be no violence or any forced action to possess the sole right of consuming doughnut alone. It is considered as the anti-law for unequal sharing of the unused resources. Thus it is the part of normative and hypothetical nature of human rights of having equal share of all the things in this world.