ATMC BUS502 Principles of Economics for Accountants

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ATMC BUS502 Principles of Economics for Accountants
Assessment Task 2 – Responses to articles
Article 2: DUE via Safe Assign 6pm Saturday 12th May
Full Name: Nikita Nikhil Chauhan
Student number: 1123144
Tutor’s name: Monjurul Hoque
Article Title:
“What is the Soda Tax and which cities have one”by Beverly Birdfrom The Balance from
25th November 2018. Available at:
https://www.thebalance.com/soda-tax-and-which-cities-have-one-4151209
Instructions:
Access the article at the URL given above and read it carefully. Answer the questions and
complete the diagrams in the spaces provided below. Use full sentences. If you use any
references, please list at least the URL of your source. Possible total for this assessment task is
15 marks.

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Question 1
According to the article, ‘the tax should reduce consumer demand for unhealthy food and
beverages’.Use the supply and demand diagram below to illustrate and explain how the
imposition of a tax affect consumers.
Owing to imposition of tax, there is shift in the supply curve considering that the tax is
applied on the sellers. As a result, there is an increase in the cost of production for the
sellers of the various products covered by the soda tax. The net effect of the imposition of
tax is that there is a shift in the equilibrium point. The new equilibrium point tends to have
a higher equilibrium price of P1 from P*. Also, the quantity consumed in the city with tax
would also decrease from Q* to Q1inaccordance with economic theory.