AS/A2 Economics: A question for AS students

Thursday, 24 September 2009

A question for AS students

Please comment here...

Why Is Water More Expensive than Beer when Alcohol is taxed?

4 comments:

Tom said...: Water will become more expensive as water is a good substitute for beer (yeah right...). When the price of beer goes up, as a result of the taxes on alcohol, the demand for water will increase. The supply however, will remain the same. Therefore the price of water will increase.; 24 September 2009 at 21:32
UmidbekEF said...: Maybe because of the taxes on beer, there is a less supply for beer, so the demand for beer is less than before,(but people still buy it) because of that more people are starting to buy water, so the demand for water shifts right, it means the price of water extends); 25 September 2009 at 21:35
Kristian Tveit Diskerud said...: A pub wants people who buys several drinks in an evening. A good drinker may drink 3-4 beers in a couple of hours, but someone who buy water are less likely to buy more than one pint. 3-4 pints of beer is more attractive than 3-4 pints of water.

The pub is happy to have a lower profit margin on beer than water because the total profit from a beer drinker usually results in a higher total profit than with someone who drinks water.; 25 September 2009 at 23:49
chris sivewright said...: Kristian

You should put your source....

http://www.economicshelp.org/blog/economics/price-of-beer/; 26 September 2009 at 00:58

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