Questions and Answers on Economics

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Question 1 Economics and Alcohol Abuse - When economists think about a product in general, they think supply and demand. If there is no demand for the product, then there will likely be a smaller supply. If the item is rare and there is a high demand, then the product will be expensive. One political and economic idea about reducing alcohol abuse is to target the youth market where alcohol is prevalent, if illegal. The youth market, that is 14-17 years of age, are more likely to be more affected by the price of alcohol than the adult market. Young adults are especially sensitive to price increases because they have less disposable income than adults and are typically less addicted. If young people are not working, they typically depend on their parents for lunch and spending money, and unless the parent is aware of their drinking, which is unlikely, they are not really going to give money to give the child more money to spend on alcohol. We already limit the drinking age, but still alcohol is sold. By raising the price to a prohibitive level, fewer teens will become addicted and may, as they mature, decide not to drink after all. Additionally, since the youth market is not only sensitive to price, but to peer influence, reductions due to price will also have reductions in peer pressure to drinking. While the younger market is far more sensitive to price than the older market, raising alcohol prices is, at times, just the impetus adults need to either limit their own
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