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Soda Tax EC

Soda Tax EC

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Published by Barbara Jun

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Published by: Barbara Jun on Dec 30, 2013
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Angela Jong Econ 101 October 3, 2012 Soda Tax I support the usage of soda tax because a tax

on sodas would raise the price of the good, which would lead to lower consumption/demand of soda. This is proven through subsitution effect and assuming that soda is a normal good, but even if it is an inferior good, the substituton effect would lead to lower consumption of it. In that case, if soda is less demanded, obesity and other health related effects of consuming soda would be reduced as well. The improvement of the health of citizens would a) lead to more efficient output of workers, that can help firms produce at a lower marginal cost b) reduceg the costs of healthcare spent by the government. These funds previously spenton health care can be invested and used elsewhere. This would offset the deadweight loss in the economy due to a tax.

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