In 1995, the Food and Drug Administration (FDA) published new labeling standards for bottled water. (The full text of the final rule can be found at https://cfr.vlex.com/vid/165-110- bottled-water-19705533.) Prior to that time, bot- tlers could sell regular tap water under a bottled water label.
In fact, the FDA estimated that approximately 25 percent of the supply of bottled water was nothing more than ordinary tap water. Consider how these tougher standards eliminated 25 percent of the supply of bottled water. If mar- ket demand is unaffected, what qualitative impact would this labeling change have on equilibrium Now, suppose the change in standards results in a price and quantity for bottled water? Support new market supply of QS = 400P - 350, with no
your answer with a graphical model.