To combat the obesity epidemic, the government is considering a tax of $0.50 per can on non-diet soda. Cans of soda currently cost $1.

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4. To combat the obesity epidemic, the government is considering a tax of $0.50 per can

on non-diet soda. Cans of soda currently cost $1.00.

(a) If the government’s goal were to reduce quantity by as much as possible, would it

prefer that supply be more elastic or less elastic? What about demand?

(b) If the government’s goal were to raise revenue, would it prefer that supply be

more or less elastic? What about demand?

(c) Suppose elasticity of demand is

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