Econ 201

Suppose a local government votes to impose an excise tax of $0.80 per bottle on the sales of bottled water. (Assume that all bottles are identical and residents cannot shop elsewhere.) Before 3.00- the tax the equilibrium price and quantity are $1.40 and 2200 bottles per day. After the tax 2.80- is imposed, market equilibrium adjusts to a price of $2.00 and quantity of 1700 bottles per day. 2.60- a. Draw the supply and demand diagram before and after the excise tax is imposed. 2.40- 2.20- 1.) Using the line drawing tool, plot the original and new supply curves and label the lines 2.00- properly. 1.80 - 2.) Using the point drawing tool, indicate the original and new equilibrium points and label these 1.60- points properly. Price ($ per bottle) 1.40- Carefully follow the instructions above, and only draw the required objects. 1.20- 1.00- 0.80- 0.60- 0.40- 0.20- 0.00- 0 1000 2000 3000 Quantity (bottles per day) Clear all Ch