There Have Been Proposals That a Tax Be Imposed on Sugar-Laden

Multiple Choice

There have been proposals that a tax be imposed on sugar-laden soft drinks in an attempt to reduce their consumption.Assume for simplicity that all bottled soft drinks are the same size.Suppose the initial market equilibrium is P = $2.00 and Q = 1000. FIGURE 4-4
-Refer to Figure 4-4.Suppose the government imposes a tax of $0.60 per soft drink purchased.The change in total expenditure on soft drinks is

A) a decrease of $80.
B) a decrease of $160.
C) an increase of $320.
D) an increase of $480.
E) No change in total expenditure.