Scenarios:
The government often interferes in the free market to achieve an objective. Discuss, using diagrams, the impact each of the following interferences might have on equilibrium price and quantity. Each action could have an impact on the equilibrium in various markets, so please ensure you specify which market you are discussing as you complete the assignment.
1. A tax on petrol with the aim of reducing C02 emissions
2. A subsidy on bus fares to encourage higher utilization of public transport.
3. A price floor on alcohol to reduce consumption. In your answers, provide a justification for your opinions based on the economic theory covered this year. State clearly any unintended consequences of these government actions.
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