Govt. of the country imposes tax on petrol usage by the people, what impact will this have on budget line of a consumer showing consumption of two commodities petrol and food items on it? What is policy implication behind tax imposition ?

Govt. of the country imposes tax on petrol usage by the people, what i

1.	Govt. of the country imposes tax on petrol usage by the people, what impact will this have on budget line of a consumer showing consumption of two commodities petrol and food items on it? What is policy implication behind tax imposition ?
Answer» Solution :When tax is imposed on petrol, its PRICE goes up. Due to this the budget line ROTATES leftwards. When budget line rotates leftwards, it implies fall in quantity demanded of petrol by the consumers due to increase INITS price. The POLICY implication behind tax on petrol is indirect restriction on usage of petrol and ENSURES judicious use of scare resource