During Friday of Unofficial the Cities of Champaign and Urba

During Friday of Unofficial the Cities of Champaign and Urbana restrict the selling of alcohol (e.g. beer kegs) from any bars and retail stores. For this policy to be effective, students’ demand for drinking during Friday of Unofficial must be relatively:

    (a) price elastic

    (b) price inelastic

    (c) unitary

    (d) the price elasticity of demand does not matter

Solution

Right answer is (A)

Restriction would be successful only if demand is elastic. Consumer can postpone use of alchohol if demand happens to be elastic. otherwise he would look for other expensive outlets.