In the past, some counties and countries have imposed taxes on sugar, saturated fats, and food made with those ingredients as a way to reduce consumption of those foods. Assume the government imposes a unit tax on all chocolate. Answer the following questionsIs there an externality from consuming chocolate? Explain why or why not.Use a correctly labeled graph to show what happens in the market for chocolate as a result of the unit tax. On your graph, show the market equilibrium before and after the tax (i.e. show the equilibrium prices and quantities.) Show graphically what happens to consumer surplus and producer surplus after the tax (you may need a separate graph to show this.)Will consumers be able to shift this tax to sellers? If yes explain why/how. If no explain why not.Based on your answer to c, who will bear the incidence of this tax? Show this on a graph.How will consumers respond to the tax on chocolate? How will candy companies respond strategically to the tax on chocolate

As the milk chocolates includes huge sugar content which can lead to some health related issues. And…

Answered: In the past, some counties and…

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 2PA

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In the past, some counties and countries have imposed taxes on sugar, saturated fats, and food made with those ingredients as a way to reduce consumption of those foods. Assume the government imposes a unit tax on all chocolate. Answer the following questions

Is there an externality from consuming chocolate? Explain why or why not.
Use a correctly labeled graph to show what happens in the market for chocolate as a result of the unit tax. On your graph, show the market equilibrium before and after the tax (i.e. show the equilibrium prices and quantities.) Show graphically what happens to consumer surplus and producer surplus after the tax (you may need a separate graph to show this.)
Will consumers be able to shift this tax to sellers? If yes explain why/how. If no explain why not.
Based on your answer to c, who will bear the incidence of this tax? Show this on a graph.
How will consumers respond to the tax on chocolate? How will candy companies respond strategically to the tax on chocolate

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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