Question
(b) To reduce the number of diabetes patients in a country, the government has decided to impose a tax on sugar to discourage the consumption
(b) To reduce the number of diabetes patients in a country, the government has decided to impose a tax on sugar to discourage the consumption of sugar. Illustrate and compare, with one diagram, the effects on price and quantity in the sugar market when the same amount of tax on sugar is imposed on both the producers and the consumers at the same time. You will need to explain the shapes of the price elasticities of the market demand and the market supply curves of sugar when you draw the sugar market diagram. Specify the tax revenue and explain which party will end up paying more of the tax.
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