Please read the scenario and points 1 and 2 and answer point 3 using only the concepts of Supply and demand, Consumer and Producer surplus, Taxes and Subsidies, and Consumer Behaviour.

3 Policy Evaluation (30 points) Let's forget about Tesla for a second, and think about the mentioned governmentas fuel tax and ZEV subsidy policies. You can use the following points to get started on evaluating these policies. . Do these policies help or hurt ZEV producers? . Do you think society will be better off? 0 Which consumers (lowincome, for example) are most likely to be aected by each policy? Premise \"The Canadian government recently announced a Zero Emissions Vehicle (ZEV) mandate. It requires that by 2030, half of all new lightduty vehicles sold fall into the ZEV category, which includes electric, hybrid, or hydrogen powered vehicles. By 2035 this requirement will apply to all new lightduty vehicles. Without providing any details, the government also announced it will make $1.5B available for rebates (or subsidies, herein used interchangeably) on ZEV purchases.\" Scenario This announcement has garnered the attention of many ZEV proponentsincluding Elon Musk. In light of this, Elon has become obsessed with the Canadian ZEV market and, as such, has set up a new head ofce in Toronto. The Board of Directors has told him that he needs to hire a Chief Economist to assess the market landscape here in Canada in the wake of the government's new ZEV mandate. As part of the hiring process, he has put together an assignment for this class. He has chosen to provide an outline where he has specied the key topics he wants candidates to address. Although these topics are fairly wide open, Elon wants his Chief Economist to apply economic concepts across a range of possible issues as they relate to Tesla. That being said, part of this assignment is to gauge how youias an economistithink these areas relate to Tesla's business. That means you do not have to address all of the guiding points provided and are encouraged to offer insights that stand out from the crowd. In doing so, keep in mind that Elon is also a stickler for concision, so make sure everything you include in your assignment adds to your addressing of the section's topic. Elon has set a hard limit for the assignment of 500 words. Remember, your chance of getting this position depends signicantly on the output of your work. Here is the outline he has provided: 1 The Subsidy and the ZEV Market (30 points) I am trying to get a better understanding of how this new mandate will impact Canada's ZEV market. I know that for some years, the federal and most provincial governments have offered incentives for consumers who buy ZEVs. The Federal government currently provides a subsidy of up to $5,000 on the purchase of new ZEV; this rebate only applies to cars under $45,000, for the most part. There are a limited number of rebates available in that the incentive program has limited funds. Before the mandate's new funding, there was only enough for 120,000 vehicles, assuming $5,000 for each new car sold. Tesla's business is directly related to this topic. I need my Chief Economist to explain the elements of ZEV market and the possible consequences of the new mandate for Tesla's revenue. In doing so, keep in mind the following (but do not limit yourself to this list, it is by no means comprehensive): . The market demand for a ZEV with and without the ZEV subsidy . The impact of the cutoff price (under $45,000) on vehicles eligible for the subsidy . How will the subsidy affect market supply in the short and long run? . The effect of the mandatewhich is essentially a ban on lightduty vehicles that are not zeroemission after 2035ion consumers . Consequences for Tesla's revenue 2 Carbon Tax and Internal Combustion Engine (ICE) Vehicles (30 points) ZEVs are cheaper to operate than Internal Combustion Engine (ICE) vehicles sim- ply because fuel is nonrenewable and is more expensive per kilometer than electricity, no matter how efcient the combustion engine is. I have heard fuel has become increasingly more expensive in Canada. As far as I know, this issue is heavily inuenced by Cana dian taxes on fossil fuels. In 2018, the Canadian government introduced new legislation imposing a Carbon Tax on fossil fuels like gasoline and natural gas. Then, in 2020, the government altered the tax scheme lifting the nal tax level higher than was initially out- lined; the plan is structured such that the nal level of taxation is reached over gradual increases until 2030. All of this directly impacts the ICE vehicle market, and in turn, indirectly affects Tesla. How do you think (as a candidate for the Chief Economist role) about the implications of this tax for our market? Elaborate on this topic explaining the things that make it relevant to Tesla, possibly concerning the following (but not limited to): . Carbon taxes, fuel market, and vehicle market . Tax implications for producers and consumers 0 Implications of the carbon tax on vehicle ownership . Consequences for Tesla's revenue