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As we've learned, our choices are affected in many ways. In this Economix article about the "Beer Recession" we see the classic normal good scenario. If drinking beer at a bar is a "normal good" demand will fall as income falls, as we would predict! Also in the article, brewers are quoted saying that the hefty tax on beer has caused the dramatic drop in sales. You'll be able to answer this question more easily as the semester progresses, but how does a tax on beer change the quantity demanded? Do you expect the tax to lead to a big drop in quantity demanded, or only a little bit of a drop? What does it depend on?
R10394446
1/23/2012 05:49:34 am
I almost thought that the worse the economy got, the more liquor sales would rise. I always could go for a beer or 15 if I've had one of those days. But maybe the increased tax forced the beer companies to raise they're prices, therefore, pushing everyday alcohol use out of the average American's price range.
R10131085
1/29/2012 05:58:04 am
It wouldn't be smart to put a tax on beer or liquor. Even in rough economical times beer companies flourish. However with the tax I don't think you would see much of a change in quantity demanded because beer companies would just lower their prices to equal out the added tax. Comments are closed.
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