step step explanations please!!

* Q19. Tom and Karen are economists. In an attempt to limit their son Harry's use of the family car, they charge him a user fee of 20 cents/km.At that price he still uses the car more than they would like, but they are reluctant to antagonize him by simply raising the price further. So Tom and Karen ask him the following question: What is the minimum increase in your weekly allowance you would accept in return for having the fee raised to 40 cents/ km? Harry. who is a known truth-teller and has conventional preferences, answers E 10 [wk a. If Tom and Karen increase Harry's allowance by E IO/wk and charge him 40 cents/km, will he drive less than before? Explain. The original budget constraint and the post-change budget constraint are shown as 31 and 32, respectively. Harry curtails his mileage from M1 to M2. Harry's original consumption choice if point P1, with associated mileage M1. Alter the policy change, Harry's new optimal consumption point is P2, with associated mileage M2. Harry thus curtails his mileage. b. Will the revenue from the additional charges be more than, less than or equal to E IO/wk? Explain. We can actually see the extra revenue Tom and Karen collect from the extra 0.20 mileage on the graph. [t is the vertical distance between the green budget line 32 (which is what Harry keeps after paying the extra fee) and the dashed black line with the same vertical intercept as 32 (which is what Harry could afford if he got the extra 10 without paying the higher fee). This vertical distance is zero at the y-axis (if he drives zero, then he gets no revenue], and the vertical distance maxes outat 110:10' which is where Harry spends his entire income on mileage fees. We can see that since Harry actually drives M2 km, that the extra revenue his parents gets must be less than 10, because 10 is the vertical distance between The original red budget line 31 and the dashed hypothetical budget line parallel to it which starts at Ya + 10, and the indicated purple arrow is smaller than the E 10 gap. knweek