Evaluate the likely microeconomic effects of such a tax
Edexcel A-Level Economics 25 Mark Question
In 2015 a report by Public Health England recommended the imposition of a 20% tax on the sale of soft drinks that contain high levels of sugar. Evaluate the likely microeconomic effects of such a tax. (June 2017)
Plan
- Paragraph 1
- Argument: another effect of a sugar tax is that market failure is solved; previous negative externalities in consumption
- Diagram: negative consumption externalities diagram
- Evaluation: government failure
- Paragraph 2
- Argument: one effect of a sugar tax is an increase in price for sugary drinks
- Diagram: indirect tax diagram
- Evaluation: tax revenue and question how it is used
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