Now obesity as a market failure situation is pushed into context because of the sales of sugary products which can hence be considered as the cause for the negative externality. Although someone produces the sugary food and someone else consumes it, there is a cost to the society. The decision based impact to society is not paid for by the persons making the decisions to sell and buy here. The cost to society exists because the impact of the good to society is more than what the person buying it pays. In such a market only marginal cost and marginal benefit are considered but not the cost of externality. This results in market inefficiencies and which addressed results in market failure. The manufacturer of the sugary product does not take control of the product’s costs of externality. The supply curve shifts down in this case and with the lowering of the marginal cost, the demands start to rise. Marginal benefit hence becomes equal to that of the marginal cost. In the below graph, the optimal production is given by Q1 which is the production that is just enough to satisfy the consumers. However Q1 is the production that has been the result of excessive production and demand. This results in welfare loss which is also called the deadweight welfare loss (Negative Externality, 2016). Now with the introduction of the sugar tax, what happens is that either the producer or consumer or both would have to pay extra for the product to be sold and purchased. Consumer might end up paying more to use a sugary product or producer might end up paying more to manufacture a sugary product, either ways would help control the demands by reducing the manufacturing of the product.