In Order to Discourage Consumers from Eating Unhealthy Fast Food

question 58

Multiple Choice

In order to discourage consumers from eating unhealthy fast food, the government is considering placing a tax on all fast food sales. Which of the following statements is true?

• A) Given the numerous alternatives, consumers' demand for fast food is relatively inelastic and the tax will not likely work to discourage fast food consumption.
• B) The tax on fast food will likely raise considerable revenue but will be unlikely to reduce the consumption of fast food by consumers.
• C) The tax on fast food will likely increase the demand for home cooked meals.
• D) A tax on fast food will only be effective if demand is perfectly inelastic.

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