Question

Why is it important that the government takes the elasticity of food items into consideration when making plans or formulating health policies such as reducing the prevalence of obesity?  

Answer 1

Answer - The elasticity of demand helps to determine whether the taxing of the good for reducing its consumption will result in decreased consumption and obesity or not. If the demand for a food that results in obesity is inelastic , the tax on that food item will not decrease the demand and will not discourage the consumption thus not fulfilling the desired target of health level.

But if the demand is elastic ,imposing tax upon harmful fast food will result in decreased consumption , thus bringing the desired improvement in the health level.

Hence elasticity always needs to be considered while formulating such policies related to consumption of food.