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    Hi,

    For some reason I'm really confused about this question.

    Here's the situation:
    Bars ban periods when drinks are cheaper in order to reduce alcohol consumption.

    I have to make a demand and supply diagram to illustrate the impact that this would have on the market for alcohol.

    I figured that the first thing to point out would be the rise in price, but then that's where I get confused about demand and supply of alcohol, as they can only shift because of factors other than changes in price! So basically I don't really know how to do my diagram in this case.

    Can anyone help me figure out how to do this?

    Thank youuu!
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    (Original post by Dogs Eating Dogs)
    Hi,

    For some reason I'm really confused about this question.

    Here's the situation:
    Bars ban periods when drinks are cheaper in order to reduce alcohol consumption.

    I have to make a demand and supply diagram to illustrate the impact that this would have on the market for alcohol.

    I figured that the first thing to point out would be the rise in price, but then that's where I get confused about demand and supply of alcohol, as they can only shift because of factors other than changes in price! So basically I don't really know how to do my diagram in this case.

    Can anyone help me figure out how to do this?

    Thank youuu!
    How would prices increase? I think what they're asking you to do is to shift demand to the left, there is going to be less demand for alcohol as the times when they are cheaper has been reduced, so less people will buy alcohol. I hope this helps
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    (Original post by Dogs Eating Dogs)
    Hi,

    For some reason I'm really confused about this question.

    Here's the situation:
    Bars ban periods when drinks are cheaper in order to reduce alcohol consumption.

    I have to make a demand and supply diagram to illustrate the impact that this would have on the market for alcohol.

    I figured that the first thing to point out would be the rise in price, but then that's where I get confused about demand and supply of alcohol, as they can only shift because of factors other than changes in price! So basically I don't really know how to do my diagram in this case.

    Can anyone help me figure out how to do this?

    Thank youuu!
    Draw a D and S diagram.
    Shift D outward to D1 (alcohols may become cheap because the chancellor has reduced the tax on it. Just as Mr.Osborne has done with cutting down 1P for a pint.) So this makes people demand more (ceteris paribus) however as soon as this happens bars will reduce their supply from S to S1 pushing the prices back up.

    If you have to evaluate you can talk about the elasticity of demand and supply.
    Maybe the shift in demand from D to D1 is not that great so it doesn't effect prices much and hence not effecting supply a lot.
 
 
 
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