The government decides to tax cookbooks because they feel that they encourage overeating and can lead to health issues, such as obesity and heart disease.
Answer the following:
What type of tax is this? Explain.
What happens to the supply of cookbooks?
What happens to the equilibrium price?
Who pays the tax at the end?
Is this a good way to finance programs to improve health?
What other types of tax can the government use to increase revenues?