Denmark recently instituted a “ fat tax,” which charges about $ 3 per kilogram of saturated fat in food. One commentator criticized the tax as inefficient, because it taxes an input to health rather than a health outcome [ Sexton, 2011]. Assess this criticism. Your answer should consider both how the tax might lead people to substitute into other non- healthy foods, and the fact that some people exercise to stay healthy or are genetically inclined to be healthy despite their diet.
Answer to relevant QuestionsFor each of the following situations, is the Coase Theorem applicable? Why or why not? a. A farmer who grows organic corn is at risk of having his crop contaminated by genetically modified corn grown by his neighbors. b. ...Suppose that two firms emit a certain pollutant. The marginal cost of reducing pollution for each firm is as follows: MC 1 = 300 e 1 and MC2 = 100e2 , where e 1 and e2 are the amounts ( in tons) of emissions reduced by the ...Assume that the demand curve for milk is given by Q = 100 - 10 P , where P is the price per gallon and Q is the quantity demanded per year. The supply curve is horizontal at a price of 2. a. Assuming that the market is ...Suppose a family with only one child earns $50,000 per year and live in a community without publicly provided education. a. Draw the family’s budget constraint showing the tradeoff between quantity of education for the ...According to Viscusi and Gayer , regulations in the United States vary greatly in the cost per each life they save. For example, the regulation to install passive restraints in vehicles has a cost per life saved of $ ...
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