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 elastic and the tax will 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) Both A and C are true.

Question

Quizplus · Accepted Answer

If the demand for fast food is elastic, a tax would discourage consumption. Additionally, as fast food becomes more expensive, consumers might opt for home-cooked meals.

In Order to Discourage Consumers from Eating Unhealthy Fast Food