Student Worksheet 3

Business in context

The government was in a dilemma. The latest statistics showed that more people in the country were smoking, and the incidence of deaths from lung cancer was increasing. this was not good news. The minister looked at the figures.

Soon the anti-smoking lobby would be calling for the government to introduce measures to reduce the number of smokers in the country. they would be countered by the campaigners for freedom to choose.

And then there was the health cost to consider: the minister had calculated that if everybody gave up smoking, the government could make a further reduction in tax. That would benefit everybody, smoker and non-smoker alike.

But the minister also had to consider the country's industry: the tobacco industry was a major employer and exporter. Any action now to reduce smoking in the country could harm employment and even drive the tobacco companies abroad.

It seemed that there were three things the government could do:

• Increase the tax on cigarettes and tobacco in an attempt to reduce smoking - that would upset the campaigners for freedom to choose and the tobacco industry;
• Put on a national television advertising campaign to educate people about the dangers of smoking - at least people could choose for themselves whether to smoke or not, but that would not be enough for the anti-smoking lobby;
• Nothing - after all, was it the government's job to tell people whether they could or couldn't smoke?

All of the alternative would upset somebody. The minister had to choose.

Questions

1. What is the problem that is troubling the minister? (>)
2. Why do you think the government has to deal with the problem? (>)
3. Explain in your own words the three options for action that the minister has outlined? (>>)
4. Which course of action do you think the government should take? Justify your answer! (>>>)

Activity
Read the market, planned and mixed economies studies.

1. Suggest arguments for and against a market economy! (>>)
2. Do you think that a market economy is an effective way of providing the goods and services wanted by society? Explain your answer! (>>>)

Resource: Chris J. Nuttall, IGCSE Business Studies, Cambridge University 2002