In order to discourage consumers from consuming sugary soft drinks, the government is considering placing a tax on sugary soft drink sales. Which of the following statements is true?

Question

A. Given the numerous alternatives, consumers' demand for sugary soft drinks is relatively elastic and the tax will likely work to discourage sugary soft drink consumption.
B. The tax on sugary soft drinks will likely decrease the demand for sugar-free soft drinks.
C. The tax on sugary soft drinks will likely raise considerable revenue, but will be unlikely to reduce the consumption of sugary soft drinks by consumers.
D. Taxes do not discourage consumers from consuming products.

Answer 1

Answer: A