Suppose a local government votes to impose an excise tax of $0.90 per bottle on the sales of bottled water. (Assume that all bottles are identical and residents cannot shop elsewhere.) Before the tax the equilibrium price and quantity are $1.20 and 2100 bottles per day. After the tax is imposed, market equilibrium adjusts to a price of $2.00 and quantity of 1400 bottles per day. How much revenue from the tax does the local government collect each day?

Suppose a local government votes to impose an excise tax of $0.90 per bottle on the sales of bottled water. (Assume that all bottles are identical and residents cannot shop elsewhere.) Before the tax the equilibrium price and quantity are $1.20 and 2100 bottles per day. After the tax is imposed, market equilibrium adjusts to a price of $2.00 and quantity of 1400 bottles per day. How much revenue from the tax does the local government collect each day?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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