Watch the following video on how elasticity affect the incidence of taxation and answer the question below:

Junk food has been criticized for being unhealthy and too cheap, enticing the poor to adopt unhealthy lifestyles. Suppose that the state of Oklakansas imposes a tax on junk food. For the tax to actually deter people from eating junk food, should junk food demand be elastic or inelastic?

Question

Watch the following video on how elasticity affect the incidence of taxation and answer the question below:

Junk food has been criticized for being unhealthy and too cheap, enticing the poor to adopt unhealthy lifestyles. Suppose that the state of Oklakansas imposes a tax on junk food. For the tax to actually deter people from eating junk food, should junk food demand be elastic or inelastic?

BlackTom AI · Accepted Answer

To evaluate how a tax on junk food affects consumption, we need to consider how responsive buyers are to price changes.
Option 1: Inelastic. If demand is inelastic, consumers hardly change the quantity they buy when price rises. A tax would raise prices and mostly be borne by consumers in the form of higher spending, while quantities sold drop only slightly. This means the tax would fail to deter consumption effectively, which makes this option incorrect for the goal of deterring junk food eating.
Option 2: Elastic. When demand is elastic, consumers are sensitive to price changes and will significantly reduce their purchases when the price increases due to the tax. The larger the drop in quantity demanded, the more effective the tax is at deterring consumption. This aligns with the stated goal and makes this option the correct one.
Option 3: Indeterminate. Saying the effect is indeterminate would ignore the core concept of price elasticity: the degree of responsiveness of quantity demanded to price changes varies by the product and the consumers. While in some unusual cases elasticity could be unclear, the standard expectation for deterring consumption through a tax relies on elastic demand to be effective, so this option is not appropriate here.

类似问题

What was the world's first widely adopted biodiversity policy?

The aim of the Paris Agreement is to ensure that the earth’s preindustrial temperature is not exceeded by more than º Celsius.

The IPCC's mission is to Blank ______.

Why have most international agreements for environmental protection been based on the honor system?

As was exhibited with the Montreal Protocol and the encouragement of reduced CFC production, trade can be an effective tool to compel compliance with international treaties.

The Stockholm Declaration and UNEP were the result of the Blank ______ first conference on the Human Environment in 1972.

In addition to the direct mission of the Convention on International Trade in Endangered Species (CITES), why was CITES so important?

President Trump hiring a corporate leader from the oil and gas industry to head the Department of Energy is an example of regulatory ; one intention behind this was to change environmental policy.

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单