Suppose the government imposes a temporary sales tax-one that is in effect for a short time, but will disappear in the future. The government is considering two different tax policies:

A. A big excise tax on eggs. This would cause the price of eggs to triple.

B. A smaller excise tax on both eggs and wine. This would cause the price of both eggs and wine to double.

a. Illustrate your original (no-tax) budget line and your budget line under Policy A. Mark your optimum point.

b. Suppose that, coincidentally, the government would collect exactly as much money from you under Policy B as under Policy A. Illustrate your budget line under Policy B. How does your graph illustrate the fact that the two policies cost you equal amounts of money?

c. Which policy do you prefer? Why?