Assume That a 2 Cent Per Ounce Percent Soda Tax

question 258

Multiple Choice

Assume that a 2 cent per ounce percent soda tax led to a large increase in its price and only a small decrease in the quantity of soda demanded.Economic analysis would lead one to conclude that

• A)soda should be taxed because the benefits of the tax would exceed the costs.
• B)soda should not be taxed because the benefits are uncertain.
• C)soda should not be taxed on ethical grounds since ethical benefits and costs can't be measured.
• D)the benefits of taxing soda is a normative issue. Economic analysis can be used to contribute to discussion of this issue but cannot decide it.

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