Question: The government wishes to decrease the quantity demanded of water and considers putting a tax on water to increase the price. Do you think that

The government wishes to decrease the quantity demanded of water and considers putting a tax on water to increase the price. Do you think that this would be effective in reducing the quantity demanded and why? (hint: what is the price elasticity of water?). What are some equity considerations? (For example do you think that this tax is fair to everyone? Who is disadvantaged and suffers more by the tax?)(10 marks)

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