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Economics: The Basics 1st Edition by Mike Mandel
Edition 1ISBN: 978-0071316026Economics: The Basics 1st Edition by Mike Mandel
Edition 1ISBN: 978-0071316026 Exercise 5
Suppose the government taxes food according to its fat content. That is, the more fat a food contains, the higher the tax on it.
a) Would this taxation raise or lower the prices consumers pay for fatty foods (including the tax)? Draw a graph to illustrate your answer.
b) Would this tax raise or lower the amounts of fatty foods consumers buy?
c) What effect would this tax have on the prices of nonfatty foods? ( Hint: What happens to the demand schedule for nonfatty foods?)
a) Would this taxation raise or lower the prices consumers pay for fatty foods (including the tax)? Draw a graph to illustrate your answer.
b) Would this tax raise or lower the amounts of fatty foods consumers buy?
c) What effect would this tax have on the prices of nonfatty foods? ( Hint: What happens to the demand schedule for nonfatty foods?)
Explanation
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Verified
a. This would raise the price that consu...
Economics: The Basics 1st Edition by Mike Mandel
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