Practise explaining how information affects consumer decisions, analysing information provision as a response to imperfect information, and evaluating it against taxes.
Too much sugar causes an increase in a consumer's weight. A government has introduced a 'sugar tax' on the consumption of soft drinks that have a high sugar content.
How might this policy help to reduce the number of overweight people?
Consumers switch to cheaper brands of soft drink with a high sugar content.
Consumers switch to other high-sugar substitute goods, such as alcohol or sweets.
The price elasticity of demand for soft drinks is inelastic.
The tax revenue is spent on education about the dangers of soft drink consumption.
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