The rise of craft beer consumption has put pressure upon the mainstream beers (e.g Tooheys, XXXX, Carlton Draught). For many consumers craft beers are a preferable substitute to the mainstream beers. Following the increased popularity of craft beer, a report was been released showing that moderate beer consumption is good for your health. In order to limit binge drinking in society, the government decides to place a tax on all alcohol consumption. If the effect of the report on beer consumption is minor, while the tax drastically increases the price of beer, will the market price of craft beer be lower/equal/higher than prior to the rise in popularity of craft beer. [a] (Type L for lower, E for equal, H for higher, N for need more information).
Question
The rise of craft beer consumption has put pressure upon the mainstream beers (e.g Tooheys, XXXX, Carlton Draught). For many consumers craft beers are a preferable substitute to the mainstream beers. Following the increased popularity of craft beer, a report was been released showing that moderate beer consumption is good for your health. In order to limit binge drinking in society, the government decides to place a tax on all alcohol consumption. If the effect of the report on beer consumption is minor, while the tax drastically increases the price of beer, will the market price of craft beer be lower/equal/higher than prior to the rise in popularity of craft beer. [a] (Type L for lower, E for equal, H for higher, N for need more information).
Solution
[a] H for higher
The rise in popularity of craft beer would increase the demand for it, which would generally lead to a higher price. The report showing that moderate beer consumption is good for your health might increase demand slightly more, but this effect is said to be minor. The tax on all alcohol consumption would increase the cost of selling beer, which would decrease the supply of beer. This decrease in supply would also generally lead to a higher price. Therefore, the combined effect of these changes would likely be a higher market price for craft beer.
Similar Questions
What would be the effect of a beer ban on campus during certain holidays?BackgroundBeer tends to be one of the most inelastic goods in the United States. An average of many studies suggests the price elasticity of demand for beer in the U.S. to be around -0.26. Discussion QuestionSuppose the city officials around a college town are considering banning the sale of beer during certain holidays in order to prevent student misconduct from intoxication. Given the price elasticity of demand for beer, what would be the effect of such a ban? Please explain using examples.RequirementsCompose an initial post that meets the following requirements:Includes 300-500 words.Succinctly summarizes your thoughts.
If the prices of close substitutes for beer should rise dramatically and nothingelse changes, then
Research has found that an increase in the price of beer would reduce the amount of marijuana consumed. This research indicates that the cross elasticity of the two products ismultiple choicepositive so that beer and marijuana are substitutes for one another.positive so that beer and marijuana are complements.negative so that beer and marijuana are complements.negative so that beer and marijuana are substitutes for one another.
42."Economics is concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity." This statement is (1 Point)positive but incorrect.positive and correct.normative but incorrect.normative and correct.43.Ben says that "an increase in the tax on beer will raise its price." Holly argues that "taxes should be increased on beer because college students drink too much." We can conclude that (1 Point)Ben's statement is normative, but Holly's is positive.Holly's statement is normative, but Ben's is positive.both statements are normative.both statements are positive.44.Reza says "the minimum wage is too low." Iman states that "raising the minimum wage would be unfair to employers." We can conclude that (1 Point)Reza' statement is positive, but Iman's is normative.Reza's statement is normative, and Iman's is normative.Both statements are positive.Iman's statement is positive, but Reza's is normative.45.Luisa claims that "government spending $100 billion on infrastructure will reduce transportation costs by 10 percent." Joachim counters that "$100 billion on infrastructure spending will reduce transportation costs by 20 percent." We can conclude that (1 Point)Luisa's statement is normative, but Joachim's is positive.Joachim's statement is normative, but Luisa's is positive.both statements are normative.both statements are positive46."Macroeconomics is the part of economics concerned with individual units, such as a person, a household, a firm, or an industry." This statement is (1 Point)positive but incorrect.positive and correct.normative but incorrect.normative and correct.
Which of the following is an objective of the Liquor Act 2007? To ensure everyone over the age of 18 has access to the sale and supply of alcohol To regulate and control the supply and consumption of alcohol according to the expectations and needs of the community To raise awareness of the harms caused by alcohol All of the above
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.