Determine when junk food demand is elastic

Assignment Help Microeconomics

Reference no: EM131824158

Question: Junk food has often been criticized for being unhealthy and too cheap, enticing the poor to adopt unhealthy lifestyles. Suppose that the state of Oklakansas imposes a tax on junk food.

a. What needs to be true for the tax to actually deter people from eating junk food: Should junk food demand be elastic or should it be inelastic?

b. If the Oklakansas government wants to strongly discourage people from eating junk food, when will it need to set a higher tax rate: When junk food demand is elastic or when it is inelastic?

c. But hold on a moment: The supply side matters as well. If junk food supply is highly elastic-perhaps because it's not that hard to start selling salads with low fat dressing instead of mayonnaise- and cheese-laden burgers-does that mean that a junk food tax will have a bigger effect than if supply were inelastic? Or is it the other way around?

d. Let's combine these stories now. If a government is hoping that a small tax can actually discourage a lot of junk food purchases, it should hope for:

I. Elastic supply and inelastic demand

II. Elastic supply and elastic demand

III. Inelastic supply and elastic demand

IV. Inelastic supply and inelastic demand

Reference no: EM131824158

Questions Cloud

How elastic is the demand for gasoline sold at stations : How elastic is the demand for gasoline sold at stations within D.C.? In other words, if the price of gas in D.C. rises.

A paper about the ethical standards and ethical violations : Explain if anything specifically could be changed to make the studies ethical for participants?Would you be able to replicate this study today? Why or why not?

How unexpected inflation affects different groups of people : Respond to the following: Explain how unexpected inflation affects different groups of people. For example, borrowers and lenders. or savers and investors.

Determine the overhead allocation rate : Determine the overhead allocation rate under the three suggested allocation bases. Round to the two decimal places

Determine when junk food demand is elastic : If the Oklakansas government wants to strongly discourage people from eating junk food, when will it need to set a higher tax rate.

Write down the inverse demand and inverse supply curves : Write down the inverse demand and inverse supply curves. What other policy could the government implement to reduce teenage binge drinking and alcohol.

Briefly summarize the foundational approaches of behaviorism : Briefly summarize the foundational approaches of behaviorism and social learning theories and the early theorists associated with them.

Prepare the adjusting entries that should be recorded : Prepare the adjusting entries that should be recorded for Cardons at November 30, 2012.

Identify the treatment approach for your case : Identify the treatment approach for your case based upon the theory you have chosen to explain the disorder.

User Account

All Pages