Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 4, Problem 11CQ
What is the nature of the
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Explain why the imposition of the price ceiling does not result in a deadweight loss.
Based on your knowledge of the price elasticity of demand, do you think the deadweight loss of a soda/junk-food tax would be relatively large or relatively small?
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 deadweight 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.
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Economics: Private and Public Choice (MindTap Course List)
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Which of the following taxes do you think would cause the larger deadweight loss? Why?(a) a poll tax or a sales tax;(b) a sales tax on both services and goods or a sales tax only on goods;(c) an income tax only on interest and dividends or an income tax on income from all sources;(d) a tax on soft drinks or a tax on all beveragesarrow_forwardWhat happens to the deadweight loss and taxrevenue when a tax is increased?arrow_forwardIn the market for gasoline the demand curve is D: Q = 1426 - P and the supply curve is S: Q = P. Calculate the value of the deadweight loss if the government levies a volume tax of t = 42 on consumers.arrow_forward
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