According to the article, commercial trucks emit nitrogen oxide and other pollutants from burning diesel fuel. Illustrate a market equilibrium for commercial trucking shipments, assuming no government intervention (e.g. a free market). Identify the equilibrium price and quantity for those transportation services as P0 and Q0, respectively.
b. Identify the socially optimal (allocatively efficient) price (Ps) and quantity (Qs) for commercial trucking services on the same diagram you drew in part (a). Explain the rationale behind your answer. Do we have a negative or positive externality issue here?
c. Identify and label the external cost or benefit per unit of commercial trucking shipment in your diagram.
d. Identify and label the efficiency loss associated with the free market outcome you identified in part (a).
e. What impact would the proposed new standards for engines used in these trucks have on the market for commercial trucking services? Illustrate and explain how that would affect the diagram from part b.