Effects of Environmental Regulations on Domestic Production and Imports

Effects of Environmental Regulations on Domestic Production and Imports
-Refer to the figure above.The graph represents automobile consumers and suppliers in 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 raise domestic supply to S' and import supply to I'.The result of this emission policy is

A) increase imports from q₁ to q₂
B) decrease domestic supply from q₀ to q₂
C) decrease domestic demand for autos from q₀ to q₂
D) all of the above