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BUS702 Economics for Managers: Assignment

   

Added on  2020-05-04

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BUS702 Economics for Managers: Assignment_1
Part 1:Arguing For: The government must impose a tax on sugar to shift the consumptiontowards a healthier diet. Tax will decrease demand thereby making “alternatives” moreappealing and higher price will change individuals spending and eating habits over time.Sugar soft drinks create externality as it contributes to obesity. Because obesity is externalcost, tax makes people pay full social cost. Arguing Against: The government should never interfere with the consumers’choices by imposing the tax on sugar. Since sugar is a basic commodity, imposing tax willincrease the price yet consumer will still buy. This will harm the consumers as the budgetwill be restrained due to the extra costs. The government should know that sugar has a fairlyinelastic demand. Therefore, taxing sugar will only lead to increased consumer burden. Theproducers will pass the cost or shift the burden to final users of the product. Page 2 of 4
BUS702 Economics for Managers: Assignment_2

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