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,ear -roduct -roduct Excise duty 2 of tax increased "72 "12 112
.ent .ing -all Mall /i0e ("1s .ing /i0e ("1s 4M5."1 4M6.31 4M 8.11 4M 3.71 4M 8.91 4M 3.51
Excise duty1 is levied on selected products manufactured in Malaysia, namely cigarettes, tobacco products, alcoholic beverages, playing cards, mahjong tiles and motor vehicles, the mostly target of excise duty are related to drugs, gambling . Excise duty main objective is to motivating lesser people will buy that item, such as Cigarettes (drugs . !here are only " ways of tax evasion, under# declaration of custom purposes (volume and $uality and duty#free shop. %n excise duty is an indirect tax ", mean the producer is who pay to the government but they try to recover the tax by increasing the price of selling to the consumer.
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http&''www.mida.gov.my'en(v"'index.php)page*excise#duty http&''en.wi+ipedia.org'wi+i'Excise
:ssues to analy0e& % ;hat are the impacts of the excise duty for cigarettes on the producers)
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<rom the year "113 to "115, the excise duty of cigarettes has been implementing to be increased by government of "12, it was 72 lower compared to year "116 to "113.:n the law of supply if the excise tax is increase the supply will produce lessen, it is because the profit of the supply will decrease due to the tax charges by government is higher. !he producer (supplier of cigarettes is impacted in the movement of the excise duty. :t is because the objective of excise duty is to unmotivated consumer to be less buy the targeted item which having disadvantages to the society (body and mind . ;hich will assumes that higher tax (cost of cigarettes will increase, on the standpoint of supply the profit is decrease .:n general, if the tax of the cigarette increase, which mean the cost of producing cigarette increase, meanwhile the cost of sales will increase so the demand will decrease.
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<rom the year "115 to "118, the excise duty of cigarettes has been implement to be increased of 112. Compared to year "113 to year "115, it is lower 82. ?owever, the price of the cigarettes is increasing. :n research, Malaysian smo+er is increasing day by day from increasing the cigarette@s price this is the effective way to fight the rising amount of the smo+er. :n another idea, to control the demand of the consumer the supply could reduce the demand by increase the price of product.
A Explain the impact of using the demand and supply analysis, when the duty for cigarettes rises.
Graph below show the impact of the excise duty to the supply and demand (market analysis).
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:n general, if the excise tax (duty on cigarettes increase, meanwhile the cost of produce and cost of sale is increase, which mean the supply will produce lessen because of the profit is decrease in term of the excise tax is charges by government, on the stand point of demand the loss of pay is increasing which is actually included excise tax charges by government. :n contrast, if the excise tax on cigarettes decrease, meanwhile the cost of produce and cost of sale will decrease and the supplier will produce more to satisfy the increase of the demand and the consumer will be get lessen opportunity cost to afford the cigarettes.
!ax :ncrease >ecrease Bnchanged >emand >ecrease :ncrease Bnchanged /upply >ecrease :ncrease Bnchanged
!he complement goodF is a good that should be consumed with another good. Mean petrol is the consumables item of vehicle (transportation . :n general, if the price of the petrol increases the demand of the E4! will increase, in contrast if the price of petrol decrease the demand of the E4! will decrease which mean both having positive relation. !he factor of petrol is uncertainly, it change very fre$uently every year (even month in Malaysia. -etrol playing an important role in whole the automotive domain, the impact is directly approached. :n year "113 to "115 the petrol price goes up from 4M1.67 to 4M 1.51 per litre, meanwhile the demand of the E4! also increasing, it is because consumer are less motivation to own a car because the petrol price is increasing, they chose a alternative way to instead which is public transport. :n contrast, if the price of petrol decreasing, the demand of the E4! will decreasing also, it is because consumer would rather own a car instead of travel crowded E4!, which will assume that own a car is more convenience and comfortable.
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http&''bi0.thestar.com.my'news'story.asp) file*'"115'5'15'business'1515713Gsec*business
F
http&''www.wordi$.com'definition'Complement(good
A Explain how strong will be the cross elasticity of demand for other mode of transportation with respect to price of car in Malaysia)
Cross elasticity of demand -rice of car :ncrease >ecrease unchanged Cross elasticity of demand ,ear "115 "118 "111
!he /ubstitute good7 is a good that both with comparable value, which mean you need to given up another one. !he relation of the price of car and E4! is actually a substitute relation, if the price of the car increase the demand of E4! will increase and the price of car decrease the demand of the car will increase. :t is because if the prices of the car decrease, more people could afford it .:n the other hand, if the price of car increase less people could afford it and which will assume that consumer will find a cheaper way of transportation instead such as public transport, wal+ing, cycling and others. !here are many factors6 affecting the car price, such as performance, economy, /i0e of vehicle, >esign and style, Cost of insurance, >ealer reputation, Color, /alesperson. :n Malaysia, government to encourage Malaysian to buy Malaysia@s car they lower the price of -roton car to encourage Malaysian to buy. :n contrast, they higher the tax of import car to discourage people buying it, it is because to reduce the several ris+3 for the country, such as financial ris+, political ris+, operational ris+, regulatory ris+ and cultural ris+.
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C Explain how strong will be the cross elasticity of demand for car with respect to the fare of public buses.
!he relation of demand of car and fare of public buses is substitute relation. :f the fares of the public buses maintain decreasing the demand of the car will also decreasing. :n contrast, if the fares of the public buses maintain increasing the demand of the car will increasing. <rom the year "113 to "111, a 4apid.E bus fare was constant at 4M 9.51.!he fare of public buses increases most probably factor is the petrol increase but before the government ma+e declaration, bus companies are illegal to increase the fares, it is because the petrol is actually shared over the entire passenger, mean while the price of the petrol which increased in the fare is shared by everyone on the bus. Aus is the cheapest public transport which most lower salary groups of people, if the government simply increase the bus fare the opportunity cost of these group of people will increase which mean they have lessen capacity to afford the bus fares. ?owever, the bus fare is maintaining at constant 4M9.51 but the demand of the car is increasing, it is because the in the society more people desire to own a car in many factor. !he demand of the car increase were in several factor such as, consumer income increase, deflation, subsidy in vehicle increase, petrol price decrease and technology change which will assume that more vehicle will produce at lower cost and the demand will increase.
Price of car
Price of petrol