In Order to Discourage Consumers from Consuming Sugary Soft Drinks

question 63

Multiple Choice

In order to discourage consumers from consuming sugary soft drinks, the government is considering placing a tax on sugary soft drink sales. Which of the following statements is true?

• A) Given the numerous alternatives, consumers' demand for sugary soft drinks is relatively elastic and the tax will likely work to discourage sugary soft drink consumption.
• B) The tax on sugary soft drinks will likely raise considerable revenue, but will be unlikely to reduce the consumption of sugary soft drinks by consumers.
• C) The tax on sugary soft drinks will likely decrease the demand for sugar-free soft drinks.
• D) Taxes do not discourage consumers from consuming products.

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