Refer to the Figure Above

question 11

Multiple Choice

Refer to the figure above. The graph represents automobile consumers and suppliers in a country that relies on imports. Curve D is domestic demand, Curve S is domestic supply and Curve I is the import supply curve. Assume that this country imposes emissions restrictions on automobiles that changes domestic supply to S' and import supply to I'. The result of this emission policy is

• A) an increase of imports from q₁ to q_2.
• B) a decrease of domestic supply from q₀ to q_2.
• C) a decrease of domestic demand from q₀ to q_2.
• D) all of the above.

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