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WA1 econ brief - Page Economic Brief on the Demand for...

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Page September 26, 2011 Economic Brief on the Demand for Sugar-Sweetened Beverages Growing epidemiologic and experimental analyses indicate that substantial intake of sugar-sweetened beverages (SSBs) can be detrimental to the overall health and may contribute to higher obesity rates among the youth. It is necessary to reduce SSB consumption. Examining the concept of demand and elasticity for SSBs will offer insights for policy makers to control SSB consumption. In economics, demand refers to the amount of a particular good or service that consumers will want to purchase at a given price. If all other factors remain equal, the higher the price of a good, the less people will demand that good. For SSBs, if the price goes up, its consumption will decrease. Research evidence suggests that taxes on the order of a cent or two per ounce will raise prices by enough to reduce net calorie intake and obesity. Therefore, adopting excise tax or fees on SSBs may reduce the SSB consumption. There are other strategies that may help to reduce the demand for SSBs. First, changes in prices of substitute goods may lead to a fall in the demand for SSBs. If the prices of
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