Having successfully sued the tobacco companies and to a lesser extent gun manufacturers for selling consumers unsafe products, some consumers have filed suit against McDonald's and other fast-food purveyors, alleging that the food makes them fat.

a. Provide what you think is a reasonable estimate of the elasticity of demand for fast food by Americans and justify your answer.

b. One way to reduce the consumption of fast-food would be to place a spe cial sales tax on fast-food. Suppose some such tax is levied, and assume the slope of the supply curve is 45", Who will likely pay the bulk of this tax, producers or consumers?

c. Suppose the sales tax takes the form of a simple $2 fee per person on any purchase of any one-person size or amount at a fast-food outlet. What will be the effects on the portions served (i.e., will this encourage a movement towards, or a movement away from "super sizing") and on the quality of the food offered, if any?