In the long run, the tax can assist boost national well-being by encouraging the shift to electric cars, which are more ecologically friendly and reduce reliance on fossil fuels. This can result in less pollution, better air quality, and decreased glasshouse gas emissions, all of which can benefit public health and the environment. 

However, in the short run, the tax may generate a deadweight loss owing to decreased demand and production, resulting in poorer economic wellbeing.

With the introduction of this tax, what would happen to the market for electric vehicles? Use a diagram to demonstrate the change in this market equilibrium before and after the tax imposition? Please draw a neat diagram with explanation. 

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With the introduction of a tax on electric vehicles there would likely be a shift in the market equi... View the full answer