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Keeping the health of the public in mind, the government imposes heavy tax on the consumption of a good. Its restricted consumption will be determined by whether its price elasticity of demand is : (Choose the correct alternative) *?
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Keeping the health of the public in mind, the government imposes heavy...
Introduction:
When the government imposes heavy taxes on the consumption of a good, it aims to discourage its use and promote public health. The effectiveness of this strategy depends on the price elasticity of demand for the specific good.

Price Elasticity of Demand:
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. If the demand for a good is elastic, a change in price will have a relatively larger impact on the quantity demanded. If the demand is inelastic, the quantity demanded will be less responsive to price changes.

Restricted Consumption:
The restricted consumption of a good is determined by its price elasticity of demand. If the price elasticity of demand is elastic, a heavy tax will have a significant impact on reducing consumption. This is because consumers are more price-sensitive, and an increase in price will lead to a proportionally larger decrease in quantity demanded.

Price Elasticity of Demand and Taxation:
When the demand for a good is elastic, imposing a heavy tax will lead to a substantial decrease in consumption. This is beneficial for public health as it reduces the consumption of goods that may have negative health effects, such as cigarettes, sugary drinks, or unhealthy processed foods.

Example:
Let's take the example of sugary drinks. If the price elasticity of demand for sugary drinks is elastic, a significant increase in taxes will result in a large decrease in consumption. This can help combat issues like obesity, diabetes, and other health problems associated with excessive sugar intake.

Conclusion:
In conclusion, the effectiveness of heavy taxes in restricting the consumption of a good depends on its price elasticity of demand. When the demand is elastic, a heavy tax can effectively reduce consumption and promote public health. By discouraging the consumption of goods that may have negative health effects, the government can play a crucial role in safeguarding public well-being.
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Keeping the health of the public in mind, the government imposes heavy tax on the consumption of a good. Its restricted consumption will be determined by whether its price elasticity of demand is : (Choose the correct alternative) *?
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