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Two Small California Cities, Richmond and El Monte, Are Planning

question 282

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Two small California cities, Richmond and El Monte, are planning to impose a penny per ounce tax on sugary drinks. They are being opposed by the soda industry that is vehemently against this new legislation. (Source: Reuters, September 6, 2012)
-Assuming the market of soda has a regular downward sloping demand curve and upward sloping supply curve, the tax will ________ the price paid by buyers and ________ the price received by sellers.


Definitions:

Wealth

The total value of all the economic resources owned by an individual or entity.

Contribute

To give something, such as time, money, or resources, towards a common goal or cause, often for the benefit of a larger group or project.

Benefit

A term referring to the positive outcome or satisfaction received from consuming a good or service or from a particular economic activity.

Nash Equilibrium

A situation in a non-cooperative game where each player's strategy is optimal, given the strategies of all other players in the game.

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