What happens to the budget line if the government applies a specific tax of $1 per gallon of gasoline but does not tax other goods (assuming that the consumer will still buy more than 10 gallons per week)? What happens to the budget line if the tax applies only to purchases of gasoline in excess of 10 gallons per week? 1.) Use the line drawing tool to draw a new budget constraint with the gasoline tax on all gallons of gasoline. Label this line 'L²¹. 2.) Use the multipoint curve drawing tool to draw the new budget constraint when the gasoline tax applies only to purchase of gasoline in excess of 10 gallons per week. Label this line 'L³¹. (Note: Be sure to draw the entire budget constraint, starting at a quantity of 0). Carefully follow the instructions above, and only draw the required objects. All other goods, Units per week o 10 Gasoline, Gallons per week After plotting the final point of your multipoint curve, press the Esc key on yo

What happens to the budget line if the government applies a specific tax of $1 per gallon of gasoline but does not tax other goods (assuming that the consumer will still buy more than 10 gallons per week)? What happens to the budget line if the tax applies only to purchases of gasoline in excess of 10 gallons per week? 1.) Use the line drawing tool to draw a new budget constraint with the gasoline tax on all gallons of gasoline. Label this line 'L²¹. 2.) Use the multipoint curve drawing tool to draw the new budget constraint when the gasoline tax applies only to purchase of gasoline in excess of 10 gallons per week. Label this line 'L³¹. (Note: Be sure to draw the entire budget constraint, starting at a quantity of 0). Carefully follow the instructions above, and only draw the required objects. All other goods, Units per week o 10 Gasoline, Gallons per week After plotting the final point of your multipoint curve, press the Esc key on yo

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 12RQ: Why does a change in income cause a parallel shift in the budget constraint?

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Why does a change in income cause a parallel shift in the budget constraint?
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Suppose the demand curve for butter is Q = 50 − 3P and the supply curve isQ = 2P. Suppose the government announces a per-unit tax of 1 on the priceof butter. Tax on butter can be seen as a ’fat tax’. What is the overall effectof a fat tax on the consumers? pls explain by drawing a diagram
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