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Question 2 (20 minutes) The government wishes to encourage students to become more environmentally conscious and therefore is giving a $ 15,000 per unit subsidy
Question 2 (20 minutes) The government wishes to encourage students to become more environmentally conscious and therefore is giving a $ 15,000 per unit subsidy to students who purchase electric vehicles. Given the following demand and supply, what are the economic effects of this subsidy? P = $100,000 - Q4 (1) P P = $ 50,000 + 2Qs (2) Qty(EVs) Original price (2 marks) Original output (2 marks) New price (2 marks) New output (2 marks) Benefit to purchaser (3 marks) Benefit to producer (3 marks) Total Cost to government (2 marks)
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