Bristol City Council wants to reduce the amount of alcohol consumed by its citizens. The council hires an economist who calculates that the price elasticity of demand for alcohol is -0.4. If the city council wants to reduce the amount of alcohol consumed by 2%, by how much should they raise the price of alcohol? a) £0.8 b) £5.0 c) 0.8% d) 5.0%

Bristol City Council wants to reduce the amount of alcohol consumed by its citizens. The council hires an economist who calculates that the price elasticity of demand for alcohol is -0.4. If the city council wants to reduce the amount of alcohol consumed by 2%, by how much should they raise the price of alcohol? a) £0.8 b) £5.0 c) 0.8% d) 5.0%

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter6: Simple Pricing

Section: Chapter Questions

Problem 10MC

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