1. The diagram below illustrates a person's initial budget line Bo. The horizontal axis measures units of good X, while the vertical axis measures a bundle of all other goods (Y) in dollars. A tax is imposed on X causing the budget line to pivot from Bo to Bi. TSm0 a0 o This person's total income is M = The price of good X isP=$ : The unit tax on good XisT=$ per unit. An equivalent ad valorem tax would be at the rate of t = %. On the diagram, show the income and substitution effect as the consumer adjusts to the tax. On the diagram, show the Compensating Variation of the total burden of the tax as STB. On the diagram, show the total amount of tax collected from this person as SR. On the diagram show the Compensating Variation of the excess burden of the tax as SEB. 600 - e e ! 500 | A 400 |-+ 300 200 100 | X (units)