Business, 07.04.2020 03:07 kellynadine02
On January 1st, 2017, the city Philadelphia introduced a $1 tax on soda to raise money for the cityâs public schools while fighting childhood obesity. Suppose that before the tax, the supply and demand of soda are given by (prices are in cents): (inverse) Demand: P = 500 â 3Qd 100 (inverse) Supply: P = 100 + Qs 50 . Assume initially there are no externalities in the market for soda.
A consultant from the mayorâs office criticizes the tax plan. He says that, while the tax raises money for public schools, it does nothing to fight the child obesity epidemic and also points out that instead of getting money from "big soda", the tax in effect is a transfer from Philadelphia residents to the government
What assumptions from earlier in the question would you have to change so that this consultant is correct?
Answers: 1
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On January 1st, 2017, the city Philadelphia introduced a $1 tax on soda to raise money for the cityâ...
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