Question

n/file/d/13owwBTki Fh4EAv Open with GeoGebra Price high tmissions vekicles S. Social : Value o 4, 8, uan of high emissions vehidles eto search

1 If the policy is implemented, what is the price-quantity combination determined by the market?

2 If the policy is implemented, what is the price that buyers pay?

3 If the policy is implemented, what is the price that sellers receive?

4 If the policy is implemented, what is deadweight loss generated by the externality?

5 Given the stylised representation provided in the graph above, which of the following sentences is more accurate about the burden of the policy?

A.  the burden of the policy falls more heavily on buyers of high-emission cars

B.  the burden of the policy falls more heavily on sellers of high-emission cars

C.  the burden of the policy is equally shared between buyers and sellers of high emission cars

D.  the burden of the policy is equal to zero because the externality is fully internalised

Answer 1

1.price= P4

quantity= Q2

2. Buyers pay P4

3. P2

4. C+D

5.A.  the burden of the policy falls more heavily on buyers of high-emission cars