Suppose City Council also wants to ban plastic bottles in Washington DC because of its environmental hazards.The ban on plastic bottles would also include bottled water and soft drinks, Gatorade, ice tea, etc. The Mayor is not sure about the economic impact of such a ban would have on Washington DC. City of Washington DC banned plastic bags a few years ago without assessing the economic impacts. The following are some inputs to the analysis to consider:

• Washington DC does not produce any bottled drinks. They are imported from other areas.
• Assume that the original price of bottle of water is $1.00 and $2.00 before the imposition of the ban.
• The revenue for the consumption water bottle industry and soda industry for Washington DC is $23,457,389 by consumers.
• There is no data on the number of actual bottled water consumed in Washington DC.

1. What is the research question that would be of interest to the City Council and the Mayor? State in one sentence.
2. The approach would be a policy change, e.g., what happens if there is a change in supply and what is the impact on demand. More specifically, the latter could be described as . How would you measure the ? {Hint: use$23,457,389 for this part}. Carefully show your calculations.
3. Once you identify part b, how would you use this to measure economic impacts on Washington DC? You can generalize this, so do not become to bogged down in the exact estimates.
   1. After you complete the analysis, you will obtain estimates direct, indirect and induced effects. What do you think these estimates may look like?
4. Other than economic impacts, what other impacts do you think would be important to the City Council and the Mayor?

Answer rating: 100% (QA)

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