Article Link:https://bit.ly/3fbNtrF(Links to an external site.)

1. What type of economic problem does the article discuss?

a. Positive externality in production

b. Positive externality in consumption

c. Negative externality in production

d. Negative externality in consumption

2- What is the price-quantity combination determined by the market?

a. P4, Q2

b. P3, Q3

c. P2, Q2

d. P2, Q4

The following graph provides a stylised representation of the effects of the policy proposed by the government to correct for the externality (in the graph, S2 is the supply curve after the policy is implemented).

3- Does the article provide sufficient information to conclude precisely how the burden of the policy would actually be split between buyers and sellers if the policy were implemented?

a. yes

b. no

Price of high emissions S vehicles Py A B C - - - F 0 NO WO D - + - D Social - - Value - - - - Q , Q3 Qy Quantity of high emissions vehicles