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

Question

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

Quizplus · Accepted Answer

The emission restrictions increase costs, shifting both domestic and import supply curves leftward, reducing the quantity of imports from (q₀ - q₁) to (q₂ - q₁).