1 Canada: Electric Vehicle Subsidy ProgramEven though controversial, electric vehicles (EVs) seem to be more environmentally friendly than gasoline-fueled vehicles. The Canadian govermment has been encouraging Canadians to purchase EVs by offering consumers some subsidiesBecause 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 informationDemand for EVs: P= 100,000 - 500Supply of EVs: P= 40.000 + 5000Positive externality: At $10.000 per EV because of the expected cut in carbon diaxide emission.To help visualize the situation, you constructed Figure 1 below to examine Questions #1, #2, 43 and 4SupplyDemandFigure l Electrie Vehicle SubsidyPolicy #1: The government does not intervene.Before any govermment intervention, the social surplus (SS) is equal toO a. 52,400.000O b. S1,800.000Oc $2,100.000Od. $5,700,000Policy #3: Limiting Subsidy to Lower Income HouseholdsYou 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 subsidizedproduct 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 DEE even with no subsidyIn 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 thatrequire 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 topay You believe that this also applies to the demand for EVs. With this scaled down EV subsidy program, the SS is equal toO a. $2.450,000Ob. $1.950.000Oe $1,750,000Od $1.825,00Request the answers to these 2 questions.

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Canada: Electric Vehicle Subsidy Program Even though controversial, electric vehicdes (EVs) seem to be mare emvironmentally friendly than gasoline fueled vehicles The Canadian govermment has bean encouraging Canadians to purchase EVs by offering consumers some subsidies Because you can muli task, your boss at Aeon Insights has assigned you to analyze three diferent palides Your first tsk is this EV subsidy policy asesament. From published studies, you know the following information Demand for EVs P= 100,00 - 5000 Supply of EVs P= 40.000 + 5000 Positive extarnality. At S10.000per EV because of the expected cut in carbon dioxide emission To haip visualize the situation, you constructed Figure 1 balow to axamine Questions #1, 42. 43 and #4 Ded Figue tlie Vatide Suidy Policy #1: The govermment does not intervene. Before any govermment intervention, the social surplus (SS) is equal to. Oa. S2.400.000 Ob. 51.800.000 Oe $2,100.000 Od $5,700,000 Policy #3: Limiting Subsidy to Lower income Households You reviewed the literature on subsidies and you fournd that about 60% of all subsidy expenditures go to the higher income households, such as those in the top 20% income bracket. These "vidr households would have bought the subsidized product or service even in the absence of such subsides. In the market for EVs, this means the "rich" households would have paid the price associated with Deg 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 fal ou notice that this selection is possible if you offer the S10.000 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 befeve that this abo applies to the demand for EVs With this scaled down EV subsidy program, the SS is equal to Oa $2 450,000 Ob. $1.950.000 Oe $1.750.000 O4 $1.825,00 Request the answers to these 2 questions.