The following graph (see link below) provides a stylised representation of the effects of the policy proposed by the government to correct for the externality (in the graph, S2 is the supply curve after the policy is implemented).

http://bit.ly/2MNtbYd

7.1.If the policy is implemented, what is the price-quantity combination determined by the market?A.P4, Q2B.P2, Q2C.P3, Q3D.P3, Q1

7.2.If the policy is implemented, what is the price that buyers pay?A.P1B.P2C.P3D.P4

7.3. If the policy is implemented, what is the price that sellers receive?A.P1B.P2C.P3D.P4

7.4.If the policy is implemented, what is deadweight loss generated by the externality?A.A+B+C+DB.C+DC.CD.Zero

7.5.Given the stylised representation provided in the graph above, which of the following sentences is more accurate about the burden of the policy?A.the burden of the policy falls more heavily on buyers of high-emission carsB.the burden of the policy falls more heavily on sellers of high-emission carsC.the burden of the policy is equally shared between buyers and sellers of high emission carsD.the burden of the policy is equal to zero because the externality is fully internalised