Too much sugar causes an increase in a consumer’s weight. A government has introduced a ‘sugar tax’ on the consumption of soft drinks that have a high sugar content.
How might this policy help to reduce the number of overweight people?
1 )
Consumers switch to cheaper brands of soft drink with a high sugar content.
2 )
Consumers switch to other high-sugar substitute goods, such as alcohol or sweets.
3 )
The price elasticity of demand for soft drinks is inelastic.
The tax revenue is spent on education about the dangers of soft drink consumption.
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