Answer :
Final answer:
For a junk food tax to be effective, the tax must be high enough to significantly raise prices, junk food must be a price-elastic good, and there should be readily accessible healthy alternatives. Additionally, complementing the tax with education on healthy eating and physical activity is important for changing consumer behavior.
Explanation:
To ensure that a tax on junk food effectively deters the most people from eating it, the following conditions need to be true:
- The tax should be sufficiently high to make junk food significantly more expensive and thus less attractive to purchase.
- Consumers should consider junk food to be a price-elastic good, meaning that a price increase would lead to a proportionately larger decrease in consumption.
- There should be accessible healthy alternatives available. In the absence of such alternatives, consumers may continue to purchase junk food despite the tax increase.
It should be noted that in the case of goods with inelastic demand, such as tobacco, previous increases in sin taxes have not significantly affected consumption, indicating that the effectiveness of a tax can vary depending on the product and consumer behavior.
Additional measures, like improving education on healthy eating and increasing physical activity, can complement the tax and encourage a shift in consumer behavior.