1. Donkey Kong says:

    The elasticity of demand for beer is dependent on the degree of funding from one’s parents. Accordingly, if a student pays for his/her expenses entirely with no help from parents, we can expect roughly a 1 to 1 correlation between higher tuition costs and lower beer money. However, if parents pay for all of a student’s expenses, the elasticity will likely be zero and beer money will be wholly unaffected. Furthermore, many students see beer as more essential to a solid college education than textbooks, so many would be willing to take out student loans to fund this integral part of their education. I would forecast, based on cursory observation, that the elasticity is somewhere in the realm of .10.

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