Asked by Khush Bhullar on Apr 25, 2024
In order to discourage consumers from consuming sugary soft drinks, the government is considering placing a tax on sugary soft drink sales. Which of the following statements is true?
A) Given the numerous alternatives, consumers' demand for sugary soft drinks is relatively elastic and the tax will likely work to discourage sugary soft drink consumption.
B) The tax on sugary soft drinks will likely raise considerable revenue, but will be unlikely to reduce the consumption of sugary soft drinks by consumers.
C) The tax on sugary soft drinks will likely decrease the demand for sugar-free soft drinks.
D) Taxes do not discourage consumers from consuming products.
Sugary Soft Drinks
Beverages that contain added sugar or sweeteners to enhance flavor, often associated with negative health effects when consumed in excess.
Elastic Demand
A situation in which the quantity demanded of a good or service significantly changes in response to a change in price.
Tax Revenue
The income that is gained by governments through taxation, which is then used to fund public services and goods.
- Understand the principle that taxes on goods can influence consumer behavior.
- Understand that the impact of a tax on consumption can depend on the availability of substitutes.
Learning Objectives
- Understand the principle that taxes on goods can influence consumer behavior.
- Understand that the impact of a tax on consumption can depend on the availability of substitutes.