question archive Recently there has been discussion in the news about taxing junk food (soft drinks, for example) in an effort to reduce the incidence of obesity in the U
Recently there has been discussion in the news about taxing junk food (soft drinks, for example) in an effort to reduce the incidence of obesity in the U
Subject:EconomicsPrice:2.88 Bought3
Recently there has been discussion in the news about taxing junk food (soft drinks, for example) in an effort to reduce the incidence of obesity in the U.S.
Do you think the demand for junk food is elastic or inelastic with respect to price.
Based on your knowledge of the price elasticity of demand, do you think the dead-weight loss of a soda/junk-food tax would be relatively large or relatively small? Why? Do you think taxing junk food would be a good idea? Based on your analysis, would it really help reduce the number of obese people in the United States? Explain.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Do you think the demand for junk food is elastic or inelastic with respect to price.
Demand for junk food is inelastic, Studies have shown that food, in general is inelastic. This includes junk food.
Based on your knowledge of the price elasticity of demand, do you think the dead-weight loss of a soda/junk-food tax would be relatively large or relatively small?
Because junk food is inelastic, the dead weight loss would be small. The amount bought and sold is not really affected by the price of the item.
Do you think taxing junk food would be a good idea? Based on your analysis, would it really help reduce the number of obese people in the United States? Explain.
If the goal is to prevent obesity, the answer is yes, taxing junk food could possibly help in this endeavor. However, since it is an inelastic product, the demand will still continue to exist for it. Thus, the government will have to significantly tax junk food to force this to occur.
