Assume the government imposes a $0.75 excise tax on the sale of every 2 liter bottle of soda. The tax is to be paid by the producers of soda. The figure below shows the annual market for 2-liter bottles of soda before and after the tax is imposed.

 

Instructions: Round your answers for the price to two decimal places. Enter your answers for quantity as a whole number.

a. Before the tax is imposed, the equilibrium price is $___ per bottle and the equilibrium quantity is ___ billion bottles.

b. After the excise tax is imposed, consumers pay a price of $___ per bottle.

c. After the excise tax is imposed, the price (or amount) producers keep after the tax is paid is $___ per bottle.

d. After the tax is imposed, the equilibrium quantity is ___ billion bottles.

e. The government is able to collect $___ billion of tax revenue from the tax.

Price (per bottle) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 1 2 Market for Soda 3 4 5 6 Quantity (billions of bottles) S D 7 S 8