Two statements are given. Statement I: The government sharply raised the tax on sugary soft drinks this year. Statement II: The sales of sugary soft drinks fell during the same year. Which of the following best explains the relationship between them?

Question

Accepted Answer

Statement I is the cause and Statement II is its effect. A sharp tax rise makes the drinks costlier, which plausibly reduces demand; so the tax increase (I) is the cause and the fall in sales (II) is its effect.

Two statements are given. Statement I: The government sharply raised the tax on sugary soft drinks this year. Statement II: The sales of sugary soft drinks fell during the same year. Which of the following best explains the relationship between them?

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