Tax effectiveness hinges on demand elasticity Steps:

• A tax raises the price of sugary drinks to discourage consumption and improve health.
• Price elasticity of demand measures how quantity demanded responds to price changes.
• Elastic demand leads to large consumption drops from price hikes, maximizing health benefits.
• Inelastic demand causes small consumption drops, minimizing health improvements.

Why C is correct:

• Price inelastic demand means the percentage decrease in quantity demanded is less than the percentage price increase (elasticity < 1), so the tax barely reduces sugary drink intake.

Why the others are wrong:

• A. Least elastic demand is synonymous with inelastic, making the tax more effective than claimed.
• B. Elastic demand causes a large drop in consumption, making the tax highly effective for health.
• D. Price elastic demand leads to significant quantity reduction, so the tax strongly improves health.

Final answer: C