It is common to use the tax system to hel for some hybrid vehicles (gas-electric

Question

It is common to use the tax system to hel for some hybrid vehicles (gas-electric combinations that use less gasoline tha p support new energy technologies. The federal government, for example, offers a tax credit conventional internal combustion engines) a) What effect does the tax credit have on the number of hybrid vehicles sold? The tax credit will decrease the number of hybrid cars sold because it lowers the price for buyers without lowering the return to sellers O decrease the number of hybrid cars sold because it lowers the price for buyers and raises the return to sellers Oincrease the number of hybrid cars sold because it lowers the price for buyers without lowering the return to sellers. O increase the number of hybrid cars sold because it raises the price for buyers and lowers the return to sellers b) Does the tax credit raise or lower the price charged by sellers of hybrid vehicles? The tax credit O lowers the price charged by sellers, but buyers stll pay less than they would without the tax credit O lowers the price charged by sellers, but buyers pay more than they would without the tax credit O raises the price charged by sellers, but buyers also pay more than they would without the tax credit. O raises the price charged by sellers, but buyers stll pay less than they would without the tax credit in @«J

Explanation / Answer

a). The tax credit will

(3) increase the number of hybrid cars sold because it lower the price for buyer without lowering the return to sellers.

b). The tax credit

(4) raise the price charged by sellers, but still pay less than they would without the tax credit.

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