If the number of highway deaths among young people is roughly proportional to their beer consumption and young peoples' elasticity of demand for beer is 1.5, then to decrease highway deaths of young people by 15 percent, taxes would need to be increased enough to increase the price of beer by
A) 1%.
B) 1.5%.
C) 10%.
D) 15%.

Question

Quizplus · Accepted Answer

If young people's elasticity of demand for beer is 1.5, then to reduce consumption by 15%, the price of beer would need to increase by 10% (1.5 x 15% = 10%). Therefore, taxes would need to be increased enough to increase the price of beer by 10%.

If the Number of Highway Deaths Among Young People Is