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BUS702 Economics for Managers - Assignment

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University of Southern California

   

BUS702 Economics for Managers (BUS702)

   

Added on  2020-04-29

BUS702 Economics for Managers - Assignment

   

University of Southern California

   

BUS702 Economics for Managers (BUS702)

   Added on 2020-04-29

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Running Head: Fiscal PoliciesThe Implementation of Fiscal Policies by the Australian GovernmentBy (Name)(Tutor)(University)(Date)
BUS702 Economics for Managers - Assignment_1
Fiscal Policies2The Implementation of Fiscal Policies by the Australian GovernmentQuestion 1Tax on sugary foods may sound as a better idea to stimulate people to turn to healthy eating. I would argue for tax/subsidy imposition on sugary foods as there is a possibility of promoting some healthy eating behavior. Various source has given the price elasticity for sugary foods to be less than one (absolutely). This means that sugary foods demand is relatively inelastic to prices changes. Approximately, the PED for sugary foods is about -0.3; this again means that the change in demand after a price increase which will result from the imposition of the tax will be too small. Consumers will continue consuming nearly the same level of food stuffs as before the imposition; this will raise greater tax revenue. If this revenue is used to subsidize the consumption of healthy foods, the price for heathy foods will fall and will be affordable to many. Sweets and sugary snack are things consumers can do without since they are not a necessity. Thus, their consumption will be helping many people to afford other healthy foods after tax imposition. Consumers’ welfare will be raised from purchasing healthy foods at a lower price.Fig: Inelastic DemandPriceP1P0D Q1 Q0 Quantity of Sugary foodsThe big rise in price causes only a small fall in demand because of the inelastic nature of demand.
BUS702 Economics for Managers - Assignment_2

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