To promote cleaner air, the federal government in the United States enacted tax incentives for purchasing new electric vehicles or clean-fuel vehicles. These were scheduled to be phased out over time.
a. Graphically illustrate the intended effect of this tax incentive, and explain the expected outcome of phasing it out. (Assume there is no production externality.)
b. An alternative approach is to raise taxes on gasoline and other fuels. What is the economic intuition of this policy?

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The Answer of To promote cleaner air, the federal government in the United States enacted tax incentives for purchasing new electric vehicles or clean-fuel vehicles. These were scheduled to be phased out over time.
a. Graphically illustrate the intended effect of this tax incentive, and explain the expected outcome of phasing it out. (Assume there is no production externality.)
b. An alternative approach is to raise taxes on gasoline and other fuels. What is the economic intuition of this policy?

To Promote Cleaner Air, the Federal Government in the United