Question 1 – Definitions and Concepts i. What is the meaning of tax incidence when a tax is levied on a market?

| December 7, 2018

Question 1 – Definitions and Concepts
i. What is the meaning of tax incidence when a tax is levied on a market?
(1 mark)
ii. In Chapter 1 of Gans et al. (2015) we studied the 10 economic lessons. Can you identify which economic lesson is applicable to taxing sugary drinks and briefly explain the economics behind this policy.
(2 marks)
Question 2 – Market Analysis
This question considers the impact of a tax on the market for sugar-sweetened drinks and its impact on related markets. This question does not require you to use actual data for your diagrams, but rather a general representation of these markets. (Use the Insert ï‚® Shapes ï‚® Line feature in MSWord to draw and label your diagrams).
i. Draw a fully-labelled demand and supply diagram to represent the market for sugar-sweetened drinks.

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