A local government decides to impose a tax on sugary drinks to reduce consumption and improve public health. What is the likely economic effect of this tax on the market for sugary drinks?

When a local government imposes a tax on sugary drinks, it makes these drinks more expensive for consumers. As a result, many people might decide to buy less sugary drinks because they are now too costly. This decrease in demand can lead to a drop in sales for companies that produce these drinks. For example, if a sugary soda that used to cost $1 now costs $1. 50 because of the tax, some consumers might choose water or unsweetened drinks instead.