Suppose Boston wants to reduce childhood obesity. As part of its plan, the city would impose...

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Economics

Suppose Boston wants to reduce childhood obesity. As part of itsplan, the city would impose a tax on sugary drinks like soda,Gatorade, etc because their consumption has been associated withchildhood obesity, however, the tax would be applied statewide. Thetax would be paid by suppliers. According to standard economictheory, how would the tax affect the market equilibrium price andquantity of soda sold in Boston? Do you think the tax would beeffective in reducing childhood soda consumption in Boston? Wouldit be effective in reducing childhood obesity in Boston (assumethat soda consumption does increase obesity)? Explain.

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3.7 Ratings (664 Votes)

If tax is imposed on the sellers of sugary drinks then the seller will pass on the value of tax to the consumers in the form of higher prices As per standard economic theory if tax is imposed on the See Answer

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