Alcohol price elasticity of demand
Student’s name
Institutional affiliation
The price elasticity offers opportunities for measuring and estimating the impacts of increasing or decreasing the price of the commodity on the volume of sales. For instance, if the price of an item rises, the system expects consumers to reduce the consumption rates of that particular good (Kumar, 2017). Moreover, inelastic products occur as those that change in their prices possess minimal effects on their demand. Furthermore, the case of alcoholic prices exists as inelastic based on the fact that in most cases, an increase in prices owns limited outcomes on the demand of the products. According to Kumar (2017), drinking habits make people drink various alcoholic drinks despite increasing their prices as part of their loyalty to the company or brand. Such a brand includes the scotch whiskey with the price elasticity of -0.07 in which an increase in their prices never affects their demand in the market among its loyal consumers (Kumar, 2017). Furthermore, prices of alcoholic drinks occur as inelastic since decreased demand results from some health concerns but not due to the increase in product prices. Equally, many countries intend to control the drinking of alcoholic beverages through heavy taxation. As per Kumar (2017), the affects the costs of these products, which holds minimal impacts on the consumption rates. On the same note, various types of alcohols such as beer wines and spirits possess different price elasticities; hence increase the amount of each would pose different levels of demand. Notably, the variations of the price elasticity across developing and developed nations make the prices of commodities in this industry to exist as inelastic. For example, different studies indicate that alcoholic beverages possess increased priced elasticity in developed countries as compared to the developing states (Kumar, 2017). To conclude, prices of alcoholic beverage occurs as inelastic based on facts that various brand possesses different price elastic and increase in costs hold limited impacts on the demand.
References
Kumar, S. (2017). Price elasticity of alcohol demand in India. Alcohol and alcoholism, 52(3), 390-395.