Alcoholic beverages have been around for over 8,000 years and although the World Health Organization says global alcohol consumption has remained roughly the same since 1990, the main groups that drink it are I now drink a lot more. This is what the article “Alcohol prices: Mulled Whines et al. (2013) which explains how binge drinking was once rare in Spain, as alcoholic beverages were only lightly consumed with food. However, today, at night, in the Plaza de España in the center of Madrid, many groups of people gather en masse, leading to vomiting and damage in the streets. Pitts (2010) explains that the social benefits associated with consuming alcoholic beverages include the fact that it "produces a feeling of relaxation, well-being and even euphoria in individuals, which enhances their enjoyment in any activity at hand." which they participate in,” and can also help reduce stress. and makes you more confident in your actions. However, alcohol also has social costs, as shown in The Economist et al. (2013) The demand for alcoholic beverages as a whole is inelastic, as proven by the price elasticity of demand formula. Price elasticity of demand is explained by Hubbard et al. (2012) as “the responsiveness of quantity demanded to a change in price” and can be calculated from the following formula: Price elasticity of demand = Percentage change in quantity demanded/percentage change in price. According to statistics provided by The Economist et al. (2013) on how a 10% price increase would decrease consumption by about 5%, the equation would be: Price elasticity of demand = -5%/10%, which means that the elasticity- demand price would be equal to -0.5. Due to demand...... middle of paper ...... name. However, there is a point where excessive drinking would have social costs to society, including illness and violence due to alcohol consumption. Since we also have private costs and benefits from alcohol (e.g. being able to have more fun), we consume too much of it, which creates a negative externality, as shown in the diagram below. As the supply line moves towards S + external costs, we now see that the social equilibrium is at price Pf. If policymakers also set the price wall at Pf, this shows that it is acts as an optimal social price, thereby reducing excess or deadweight loss and in fact even solves the problem of social deadweight loss at the start. This absence of deadweight loss will encourage policy makers to opt for this floor price, as opposed to a tax leading to deadweight loss, as indicated above in the graph. 1.0.