INDUSTRY: Fast Food Task: Once your proposal has been approved y...

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INDUSTRY: Fast Food

Task: Once your proposal has been approved you are to write a report by completing the following steps:

1. Provide a brief history of the industry. This will clearly show which industry (or part of that industry) you are focusing on. This only needs to be a few paragraphs long. just to put the report into context.

2 Then fully explain the key problems causing the market to fail. Market failure refers to situations when a market fails to deliver an efficient or equitable outcome.

Efficiency occurs when Social Marginal Cost equals Social Marginal Benefit.

Equity occurs if a situation or outcome is considered to be fair.

Remember, the different market failures relate to:
-consumption externalities
-production externalities
-public goods
-imperfect competition
-imperfect information

This step is done by comparing the industry to the criteria above that cause markets to fail.

Some of these need to be shown to be the major reason(s) for your industry failing.

Some of these criteria may not be applicable, or overly relevant to your indusrty and if this is the case then you must explain why. This is a reasonably large part of the assignment

3. Support your explanations by using an economic model(s) to illustrate the market failure.

4. Fully explain two appropriate interventions (policies) that the government could use to address the market failure, using an economic model(s).

Government interventions refer to interventions in a market by central or local government.

For example, these may include, for each market failure, a selection from:
-subsidies, taxes, regulations, property rights and government provision (consumption externalities)
-subsidies, taxes, regulations, property rights and government provision (production externalities)
-government provision (public goods)
-regulation (imperfect information/imperfect competition)

For your chosen industry you need to choose 2 policies that could fix the current failing(s) of the market. Do not just explain what has been done in the past.
So it could change to existing policies, or policies suggested by other of economic political theory parties, or just one that based on your understanding failure. would policies be appropriate to implement for this particular type of market

5. Then for each of your 2 policies fully explain:
a) the efficiency of the policy
    i.e. is this a good use of resources (time, money etc) and does it help fix the problems causing the market to fail

b) the equity of the policy
    here should look at the impact of each policy on the different groups in the market you and consider if it is correctly internalising the externality

6. Write a recommendation justifying which of the two policy options should be implemented based on their overall efficiency and equity.

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These solutions may offer step-by-step problem-solving explanations or good writing examples that include modern styles of formatting and construction of bibliographies out of text citations and references. Students may use these solutions for personal skill-building and practice. Unethical use is strictly forbidden.

Table of Contents:
Table of Contents: 1
Brief History: 2
Key problems that make the fast food market to fail or become inefficient 2
Externalities: 3
Consumption externalities: 4
Production externality 5
Private Good 6
Imperfect Information 7
Economic model showing inefficiency: 9
Interventions from the Government: 10
Taxing the producers: 10
Regulation and creating awareness: 12
Efficiency and equity of the two policies: 13
Recommendation: 13
References: 14

Brief History:
The fast food industry in New Zealand has developed very quickly with more than 3000 organised food outlets all over the country and is under high scrutiny from the government authorities for the provision of healthier options for the population in the country. As the youngsters are much attracted to the fast food outlets, they become the victims of obesity and other health problems that have resulted from the over-consumption of burgers and sugar-carbonated drinks. There has been reported increase in the obesity and other cardio vascular diseases resulting from weight increase and this has created a concern for the authorities to keep a check on this fast food industry (D’Costa, 2013). Fast Food industry has been in New Zealand since 1970’s, it started because the “North Americans influenced the migrants that came to New Zealand from abroad countries like USA where fast food was first invented, the migrants increased the variety of foods sold in New Zealand. Fast food Chains that started in late 70’s are as follows: Kentucky Fried Chicken (1971), Pizza Hutt (1974), and McDonalds (1976)” (NZ_History, 2016) Fast Food is Oligopoly as there are few firms that provide us a significant portion of food that is supplied in the market overall. I chose this industry because it has been in trend for quite a long time, and this will help me determine just how badly this industry has failed in New Zealand over Time and what must be done to prevent market failure from occurring. This industry has Consumption Externality which has Negative spillovers of Consumptions, and they are as follows: Obesity, Heart diseases, and Cancer. “The government tackles this issue by placing taxing and minimum prices on sugary drinks, and also restricts fast foods in school to help stop obesity in New Zealand especially in children. The government spends over $60 million on obesity programmes” (Heather, 2014,). The Government could intervene by implementing taxes on fatty foods and placing no GST on fruit and vegetables. I would later explain why the implementation of this will help in regard to market failure.

Key problems that make the fast food market to fail or become inefficient

As the fast foods are much of ease to consume, their general social and governmental acceptances make it a merit good. However, its negative health effects on creating obesity and other health issues has created negative externalities thus making it a demerit good. This commodity is also not a public good as it is not provided without profit to the consumers either by the government or by the other firms in the industry. Thus we can say that fast food...

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