Question

6) Read the article entitled Alcohol Policy and Sexually Transmitted Diseases". You can find the and Sexually article on Moodle or Canvas. The article was a direct application of the following elasticity concept A) Price Elasticity of Demand B) Price Elasticity of Supply C) Income Elasticity D) Cross Price Elasticity If the cross-price elasticity of demand between Guinness Beer and Bass Beer i 4.31, then Guinness and Bass are 7) A) complements. B) price inelastic goods. C) substitutes. D) necessities. E) Normal Goods. If the quantity demanded of hamburgers increases by 20 percent when the price decreases by 5 percent, then the price elasticity of demand in absolute value is A) 0.25 B) 4.0. C) 20.0. D) 5.0. S) 9) The price elasticity of demand for gasoline is 0.40. If the price of gasoline rises by 20 percent there will be A) a decrease of more than 20 percent in the quantity of gasoline demanded. B) an increase in the total revenue received from the sale of gasoline. C) a loss of total revenue for gasoline producers, because at a higher price the quantity of gasoline demanded decreases. D) no change in the quantity of gasoline sold because people need gasoline. 10) One reason the luxury tax on yachts imposed by the U.S. Congress in 1991 failed to produce much tax revenue was that the demand for yachts was quite inelastic. A)True B)False

Answer 1

6.

Answer: A

Price elasticity of demand = Percentage change in quantity consumption / Percentage change in price

Young adults in the country used to consume alcohol fearlessly, which is the main reason of increasing number of car accident and diseases out of sexually transmission. It could be prevented if there are taxes levied on alcohol purchase. Once there is tax, the price of alcohol would increase. Young people are not so financially sound; they may not purchase high-priced products. It decreases the demand of alcohol, which turns into lesser quantity consumption.