ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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please label L2 and L3

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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 'L²
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 'L3 (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.
A
All other goods, Units per week
10
Gasoline, Gallons per week
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Transcribed Image Text: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 'L² 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 'L3 (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. A All other goods, Units per week 10 Gasoline, Gallons per week
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