Would the city of seattle obtain the same reduction

Reference no: EM133630331

The hunigs's neighbors, the Sappies, also have $90 to spend on drinks every month and face the same prices for sugary drinks ($.5) other drinks ($1). Suppose that you cannot observe the Sappies utility function, but you observe that each month they purchase 144 sugary drinks and 18 other drinks (optimal bundle). In December 2017, in an effort to tackle obesity, the city of Seattle (where the Sappie live), passed a law introducing a 10-cent tax on sugary drinks. Assume that, as a result of the tax, the Sappies purchase 120 sugary drinks. What is the amount of other drinks that they purchase? what is the overall amount of the tax paid by Sappies? illustrate on a graph. Would the city of Seattle obtain the same reduction in the Sappies' consumption of sugary drinks if the city levied on the Sappies an income tax equal to the amount that founded in "overall amount of tax paid by the Sappies"?

Reference no: EM133630331

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