Question
The diagram below shows the original market demand and supply curves (D1 and S) for attic insulation. Attic insulation, typically materialput inside the attic to
The diagram below shows the original market demand and supply curves (D1 and S) for attic insulation. Attic insulation, typically materialput inside the attic to stop hot air flowing into the house and to stop warm air from the house flowing out into the roof, reduces energy consumption for heating in the winter and for air conditioning in the Summer.
The government wishes to meet its energy efficiency target by shifting the market demand curve for attic insulation from D1 to D2. Which one of the following policies is most likely to enable the government to achieve its objective?
An advertising campaign that explains the government will pay to remove unwanted items from the attics of homes if insulation is installed
The introduction of a maximum price (PMAX) for attic insulation
Decrease in the rate of sales tax on domestic gas and electricity used for home heating
The introduction of a subsidy paid to the firms installing attic insulation
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