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External Social Cost: Should the Government Tax Donuts?

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Given the nation's problems with obesity and the associated use of health care resources, is it appropriate for the government to use taxes and/or subsidies to encourage healthier diets? For example, there might be a tax on donuts, or subsidies on fresh vegetables. Explain.

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Solution Summary

This solution addresses whether or not it is appropriate for the government to combat obesity by taxing donuts or subsidizing vegetables.

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Yes, it is appropriate. People's unhealthy food choices create external costs to society. For example, a person ...

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