Helppppp its urgent economicssssssssss Watch

Riya24
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Report Thread starter 7 years ago
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explain why the price of PETRoL And diesel fuel may not reflect the true cost off their use.
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lace-rules
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Errm...I'm really bad at economics, but I guess it could be:

It's hard for a government to effectively put a tax value on the price of Petrol or Diesel. The Tax we pay on fuel should in theory, help contribute to combat the negative externalities of consumption of fuel, so this is stuff like pollution to the earth, pollution and health problems (asthma) etc...

However, it's hard putting an accurate valuation on these factors as who knows how much damage the consumption of fuel is doing to the earth, so how does the government know how much tax will deal with the negative externalities???

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By my guess, are you doing Unit 1 OCR Economics?

Oh, and could an economist on TSR check what I've written to see if its right?

Cheers
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Bax-man
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(Original post by Riya24)
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A starting point for your answer would be to consider the existence of externalities associated with the use of petrol and diesel fuels.

(Original post by lace-rules)
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You're essentially correct.
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