1.1.1 In October, 2015, a 5p carrier plastic bag charge went into effect in England for supermarkets and major retailers; similar charges were already in effect in Wales, Scotland, and Ireland that had shown a steep drop in plastic bag usage.

a. Explain the rationale behind this “Pigovian” tax.

b. Using a graph explain its expected effects, given the prior observations in Wales and Ireland. What might these imply about the demand and supply elasticities for plastic bags?

c. What might be some unwelcome consequences as a result of this charge?