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A Sep. 3, 2015 WSJ article reported on the struggle between soda companies and local governments. It noted: Chicago has received millions of soft-drink industry
A Sep. 3, 2015 WSJ article reported on the struggle between soda companies and local governments. It noted: Chicago has received millions of soft-drink industry dollars for health and fitness programs in recent years, but that didn't stop the chairman of the city council's health committee from proposing a penny-per-ounce tax on sugary drinks in July. In Minneapolis, another past recipient of grants, the city's health department launched a "Rethink Your Drink" campaign this summer. San Francisco officials voted in June to require health warnings on sugary drink advertisements, months after the industry spent heavily to defeat a special tax. (Source: "Sodas, Health Officials Duke It Out City by City," WSJ, Sep 3, 2015.) Suppose consumption of soda generates negative externalities through increased healthcare costs. Which of the following is true about the different measures described (ad campaigns, taxes, health warnings)? Indicate if the following statements are true or false about the different measures described (ad campaigns, taxes, health warnings): They would shift the demand curve for sugary sodas to the right. [ Select ] They would cause a decline in the quantity of soda consumed, and consequently an could increase in total surplus in this market. [ Select ] On its own, an ad campaign against soda should lead to higher prices for consumers. [ Select ] On its own, the ad campaign against soda should lead to an increase in producer surplus for soda manufacturers. [ Select ]
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