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The demand curve for two liter bottles of soda is given by QD-1000P, and the supply curve is given by QS. In an effort to reduce soda consumption, the government has placed a tax of .50 per two liter bottle that is added to the consumer's bill at the checkout.
a. Before the tax was imposed, what was the equilibrium quantity?
b. After the tax is imposed, what is the equilibrium quantity?
c. How much revenue will the government collect from this tax?
d. What is the reduction in total benefits due to this tax?
e. What is the reduction in total costs due to the tax?
f. What is the deadweight loss of this tax?
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