Negative externalities.Answer questions and draw diagrams

Extract 2 Environmental damage from bottled water Water is a precious resource. Governments should ensure the sustainability of safe water supplies for the benet of all people and the natural environment. The use of bottled water is harmful tothe environment. Three litres of water are used directly or indirectly in the production of one litre of bottled water. The majority of bottles are made of plastic and end up in landll sites rather than being recycled. Furthermore, vast amounts of plastic waste never reach the recycling plants but end up in the oceans, killing sh and birds who mistake it for food. it takes up to a thousand years for plastic to decompose and so the problem is set to get worse. Bottled water is often transported hundreds of miles from its origin to shops and consumers, at considerable carbon cost. By contrast, tap water only takes a little energy to pump along pipelines into homes. Bottled water is also expensive and consumers can pay anything up to 10 000 times more than if theyjust drank tap water. Studies have shown that tap water is generally just as clean and healthy as bottled water, if not more 50. Furthermore, over half of the bottled water in the UK comes from puried tap water. It is time for the UK Government to intervene by increasing the indirect tax on bottled water. *(d) With reference to the concept of external costs, discuss the possible economic effects of an increase in the production and consumption of bottled water. *(e) Evaluate the likely economic effects of an increase in the indirect tax on bottled water. Use a supply and demand diagram in your