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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. 

4 ) 

The tax revenue is spent on education about the dangers of soft drink consumption.  

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