Question: Engine standards. Let inverse demand for new vehicles be given by P = 4 0 , 0 0 0 0 . 0 5 Q and

Engine standards. Let inverse demand for new vehicles be given by P =40,0000.05Q and inverse
supply is initially given by P0=8,000+0.03Q. Suppose new engine standards require costly technology
adoption, shifting the supply for new vehicles up to P1=10,000+0.05Q. Prior to the engine standards,
new vehicles generate $1200 of damages per year and used vehicles generated $2100 of damages per
year. Following the engine standards, new vehicles generate $900 of damages per year.
(a) What was the pre-standard quantity of new vehicles sold and post-standard quantity of new
vehicles sold

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