Assignment help




in this case pollution. Social costs grow with the level of pollution, which increases with production levels, so at the point P1, Q1, cars are being overproduced as only private costs are considered in decisions. The minimization of social costs would lead to lower production levels. However, in this case the increase in price in cars caused by the government charging diesel cars to enter Manchester would move the price to P opt. and the quantity to Q opt. At this point, due to the price increase the Quantity would decrease as less people would be willing to spend the extra money to enter Manchester using a diesel vehicle creating a Social Equilibrium and stopping the overconsumption of cars. As the social costs are now being taken into account, less people are using diesel vehicles so the pollution would also decrease.Charging diesel cars for entering Manchester is a good way to raise government finance which could be used to fund other parts of the economy which have market failures such as inequality or reduce other taxes such as the lower brackets of income tax which would help the poor. With the additional funds that this policy would bring in for the government more could be spent on public transport which would also increase the amount of people who would use it, further reducing the amount of congestion and pollution on the roads.


电子邮件地址不会被公开。 必填项已用*标注