Suppose the government wants to discourage excessive consumption of alcohol. It therefore imposes a per-unit tax on alcohol that increases as more alcohol is bought by a consumer at a store. What happens to a consumer's budget at a liquor store (with liters of alcohol on the horizontal axis and a composite good on the vertical) --- assuming the consumer takes only one trip to the store.
A. The vertical intercept decreases and the slope becomes shallower as more alcohol is bought.
B. The vertical intercept remains constant but the slope becomes shallower as more alcohol is bought.
C. The vertical intercept decreases and the slope becomes steeper as more alcohol is bought.
D. The vertical intercept remains constant but the slope becomes steeper as more alcohol is bought.
E. None of the above.
Answer: D
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