The Prohibition of 1920-1933 failed largely because of elastic demand for alcohol. True, false or uncertain...

The Prohibition of 1920-1933 failed largely because of elastic demand for alcohol. True, false or uncertain

(Please answer with strong economic reasoning. Answer must be atleast 200 words, if not I will downvote, since it's an essay question not a simple yes or no)

Solutions

Expert Solution

If the demand is elastic, then small changes in price, changes high amounts of quantity demanded. In this case, during the years 1920-1933, the prices of alcohol were increased and given that the demand is elastic where the increase in prices of alcohol can cause hue decrease in the quantity demanded in the alcohol by the buyers on the whole. If that is the case here, then the steps taken for the prohibition of alcohol might have been highly fruitful and there could be success in this regard. However given that the elasticity of demand is the reason for the failure which is actually not true in economic terms. There might be several other reasons which has got to influence the shift in the demand curve towards right (namely non price terms) which can get to become the reason for increase in demand and in turn resulting in failure of the process. Some of the reasons include, increase in the incomes, no availability og substitutes etc. On the whole, to conclude, the given statement that elastic demand of alcohol is the reason for the failure is totally 'false' where one has to identify some of the other economic as well as other factors on the whole.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

True, False, or Uncertain Explain why each of the following statements is True, False, or Uncertain...

True, False, or Uncertain Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important. A6-5. Suppose a $1000 bond pays annual “coupon interest” equal to 10% and matures in two years. If the yield on bonds with similar risk characteristics is 3%, the price of this bond today is greater than $1000. A6-6. Suppose the Bank of...

True, False, or Uncertain Explain why each of the following statements is True, False, or Uncertain...

True, False, or Uncertain Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the explanation that is important. A6-1. An economy with a recessionary gap will never return to long run equilibrium without policy intervention. A6-2. In a closed economy, investment will equal the sum of private saving and government saving. A6-3. An increase in private saving for a closed economy...

true or false For an elastic demand curve, a 1% change in price results in a...

true or false For an elastic demand curve, a 1% change in price results in a greater than 1% change in the quantity demanded. When Colgate offers several different types of toothpaste to consumers who live in a geographically isolated community, this is an example of “captive product pricing.” An example of Optional product pricing would be the optional features when purchasing a new car. A society with three manufacturers, three customers, and no distributors will require nine exchanges in...

Question 1: True/False/uncertain For each statement, state whether you think it is True, False or Uncertain...

Question 1: True/False/uncertain For each statement, state whether you think it is True, False or Uncertain and give a short explanation for your answer. a) Malthus predicted that the population of an economy should be stable in the long run. b) Poor countries have not experienced a demographic transition. c) Improvement in GDP per capita of a country should result in lower number of missing women.

Is short-run demand for alcohol elastic or inelastic? Explain. Is long-run demand for this elastic or...

Is short-run demand for alcohol elastic or inelastic? Explain. Is long-run demand for this elastic or inelastic? Explain.

True/False/Uncertain (30 marks) Answer each of the following statements True/False/Uncertain. Give a full explanation of your...

True/False/Uncertain Answer each of the following statements True/False/Uncertain. Give a full explanation of your answer including graphs where appropriate. (When in doubt, always include a fully labeled graph.) A) Average variable cost is equal to average total cost in the long-run. B) Firms in a perfectly competitive market can earn positive profits in the short and long-run. C) A monopolist conducting perfect price discrimination does not maximize total surplus.

1. True/False/Uncertain (30 marks) Answer each of the following statements True/False/Uncertain. Give a full explanation of...

1. True/False/Uncertain Answer each of the following statements True/False/Uncertain. Give a full explanation of your answer including graphs where appropriate. (When in doubt, always include a fully labeled graph.) A) All Nash Equilibrium are Pareto efficient. B) If firms could collude in an oligopoly game, they would set either output or price at the monopoly level. C) In order for cheap talk to work in an infinite game, it must be a Nash Equilibrium in every static version of the...

Find a story which discusses an entrepreneur or business which failed largely because of their lack...

Find a story which discusses an entrepreneur or business which failed largely because of their lack of attention to financial obligations to tax or regulatory agencies of the federal, state, or local governments. Evaluate the type of business and the patterns of behavior which led to its ultimate demise because of their inattention to financial obligations to the government. Detail the elements you'd include in a tax compliance document that could prevent this type of issue from occurring in your...

Label the following as true, false, or uncertain and explain your choice. (Uncertain means that it...

Label the following as true, false, or uncertain and explain your choice. (Uncertain means that it can be either true or false depending upon the circumstances.) (a) All members of a resource cartel share a common objective, namely increase prices as much and as soon as possible. (b) By holding prices lower than they would otherwise be, placing a price control on a depletable resource increases both the speed with which the resource is extracted over time and the cumulative...

Indicate whether True, False, or Uncertain. Then provide a brief statement indicating WHY true or false,...

Indicate whether True, False, or Uncertain. Then provide a brief statement indicating WHY true or false, or if the statement is ambiguous, what would need to be altered to the statement to make it clearly true or false. a) Publicly provided insurance may crowd out the purchases of those who would pay for private insurance. b) The existence of moral hazard provides an argument for both market failure and government failure in insurance markets. c) If there were no free-riding,...

Subjects