Empirical estimates of the price elasticity of demand [in Table 3.4] suggest that the demand for household consumption of alcoholic beverages is:
A) highly price elastic
B) price inelastic
C) unitarily elastic
D) an inferior good
E) none of the above

Question

Quizplus · Accepted Answer

Price inelastic demand means that the quantity demanded of a good or service changes less than proportionally in response to a change in price. For household consumption of alcoholic beverages, empirical estimates typically show that changes in price have a relatively small effect on the quantity demanded, indicating that it is price inelastic. This is because alcoholic beverages are often considered necessary or habitual purchases for consumers, making their demand less sensitive to price changes.

Empirical Estimates of the Price Elasticity of Demand [In Table