Suggested Answers of BT2 Revision Package - ASKnLearn

However, a total ban does not makes sense too because there may be almost nosubstitutes to flying between two places, unless the land or even sea transport systembetween these two places is excellent that it almost takes the same time to reach theother destination as it would be if one was taking a plane. In some countries, the poorland transport system means that flying may be inevitable. Furthermore, a total banwould result in a total loss of the possible social benefits of flying to society. In Figure 4,we see that a total ban will result in a greater welfare loss of Area B than if nothing wasdone to regulate flying at Q P .Costs/BenefitsYMSC = MPC + MECMPCBXAZ0 Q SMPB = MSBOutput levelQ PFigure 4To sum it up, out of the three solutions proposed, the tax system seems more reasonableand practical to implement. In this globalised world, flying becomes more and moreindispensible and the demand for flying is price inelastic. Therefore governments canimplement the tax system, collect more tax revenue since the increase in cost of flyingresults in a less than proportionate fall in the amount of flying, and at the same time allowsthe market to move towards the socially optimal amount of flying. The extra tax revenuecould then be used to subsidise plane manufacturers through research and developmentsuch as Boeing and Airbus to develop new commercial jets that are environmentally friendlyand cost efficient.The other two solutions are harder to implement because it becomes a nightmare to even tryto predict the amount of permits deemed desirable, and enforcement is almost impossible.Lastly, banning of flights is almost impossible, because in the free market, market forcesshould be dictating whether people decide to fly or not, not governments.