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) The graph below shows the market for bottled water in the United States. Quantity is measured in millions and price is per bottle. Use the graph to answer the questions below. P Bottled Water 5.00 S+Tax S

) The graph below shows the market for bottled water in the United States. Quantity is measured in millions and price is per bottle. Use the graph to answer the questions below. P Bottled Water 5.00 S+Tax S

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter8: Application: The Cost Of Taxation
Section: Chapter Questions
Problem 9PA
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2) The graph below shows the market for bottled water in the United States. Quantity is measured in millions and price is per bottle. Use the graph to answer the questions below. P Bottled Water 5.00 2.40 1.20 0.90 25 S+Tax S 32.5 47.5 a) Based on the graph, how large is the per unit excise tax on bottled water? Explain. b) Based on the grahp, how many fewer bottles of water will be consumed after the tax? c) Using the graph, calculate the welfare affects of the tax. Show work. Variable CS PS R DWL Before Tax After Tax
Transcribed Image Text:2) The graph below shows the market for bottled water in the United States. Quantity is measured in millions and price is per bottle. Use the graph to answer the questions below. P Bottled Water 5.00 2.40 1.20 0.90 25 S+Tax S 32.5 47.5 a) Based on the graph, how large is the per unit excise tax on bottled water? Explain. b) Based on the grahp, how many fewer bottles of water will be consumed after the tax? c) Using the graph, calculate the welfare affects of the tax. Show work. Variable CS PS R DWL Before Tax After Tax
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