In some states, a tax on the purchase of sugary beverages has been levied to raise the price of these drinks and decrease consumption. A fictional state, known for its high quality pizza restaurants, wonders if imposing a similar tax will have any effect on its pizza markets. Assuming that pizza and soft drinks are complements, which of the following is likely to result from implementing a new soft drink tax?(1 point)

Question

In some states, a tax on the purchase of sugary beverages has been levied to raise the price of these drinks and decrease consumption. A fictional state, known for its high quality pizza restaurants, wonders if imposing a similar tax will have any effect on its pizza markets. Assuming that pizza and soft drinks are complements, which of the following is likely to result from implementing a new soft drink tax?(1 point)
Responses

The demand for pizza will increase.
The demand for pizza will increase.

The demand for pizza will decrease.
The demand for pizza will decrease.

The supply of pizza will increase.
The supply of pizza will increase.

The supply of pizza will decrease.

GPT-4o mini · Answer

If pizza and soft drinks are considered complementary goods, then an increase in the price of soft drinks due to the tax is likely to result in a decrease in the demand for pizza. When the price of a complementary good (in this case, soft drinks) rises, consumers may buy less of both goods, thus leading to a reduction in the demand for pizza.

Therefore, the correct response is:

The demand for pizza will decrease.