Question:

The Michigan legislature considered a bill to help fund our roads. One way this bill was going to fund roads was through an increase to the Michigan sales/use tax on gasoline.

Based on what you know about economic incentives, what are some of the pros and cons of this idea and how will it change/or not change behavior in your opinion?

Do you think this is a good method to help fix our roads?

Are there unintended consequences to increasing the gas tax? [There were other aspects to this bill, but this question is just asking you to respond to the sales/use tax increase.]

What might be some other instruments we can use to limit gas consumption (think about the different instruments discussed in class that can be used to modify behavior. I am looking that you use the class terminology for the different instruments in general)?

Since this is a take home question, I expect more detail than I would on the exam. Please be specific about the different instruments we discussed in class and that were a part of your reading. I would expect this answer to be about one page single spaced

Attachment:- lecture notes power point.pdf