Conclusion: Of these three policies, consumers would most prefer and producers would most prefer If you rank the policies based on economic efficiency, the highest rank is O a. Policy #2; Policy #2; Policy #2 O b. Policy #1; Policy #3; Policy #1 O c. Policy #3; Policy #3; Policy #3 O d. Policy #2; Policy #1; Policy #1Canada: Electric Vehicle Subsidy Program Even though controversial, electric vehicles (EVs) seem to be more environmentally friendly than gasoline-fueled vehicles. The Canadian government has been encouraging Canadians to purchase EVs by offering consumers some subsidies. Because you can multi-task, your boss at Aeon Insights has assigned you to analyze three different policies. Your first task is this EV subsidy policy assessment. From published studies, you know the following information: Demand for EVs: P = 100,000 - 500Q Supply of EVs: P = 40,000 + 500Q Positive externality: At $10,000 per EV because of the expected cut in carbon dioxide emission. To help visualize the situation, you constructed Figure 1 below to examine Questions #1, #2, #3 and #4: Supply Demand Figure 1: Electric Vehicle Subsidy Policy #1: The government does not intervene. Before any government intervention, the social surplus (SS) is equal to a. 52,400,000 O b. $1,800,000 O c. $2,100,000 O d. $5,700,000\fPolicy #3: Limiting Subsidy to Lower Income Households You reviewed the literature on subsidies and you found that about 60% of all subsidy expenditures go to the higher income households, such as those in the top 20% income bracket. These "rich" households would have bought the subsidized product or service even in the absence of such subsidies. In the market for EVs, this means the "rich" households would have paid the price associated with DEF even with no subsidy. In light of this finding, you want to subsidize only the households that would not purchase EVs in the absence of this $10,000 subsidy at the DEE price. This limited or selective subsidy targets lower income households and the quantity of EVs that require subsidy will fall. You notice that this selection is possible if you offer the $10,000 subsidy based on income tax T4 returns. Existing research suggests that the higher is the income of the households, the higher is the marginal willingness to pay. You believe that this also applies to the demand for EVs. With this scaled down EV subsidy program, the SS is equal to O a. $2,450,000 O b. $1,950,000 c. $1,750,000 O d. $1,825,000