Unit 1: Subsidies for electric cars

The BBC reports government plans to subsidise the purchase of electric cars from 2011

http://news.bbc.co.uk/1/hi/uk/8001509.stm

a) Using a S&D diagram, explain the likely effect on the electric car markeet of the introduction of this subsidy
b) Explain why the outcome may not be as the government intends

More on the BYD electric car at
http://news.bbc.co.uk/1/hi/world/7992180.stm
...and the GM car
http://news.bbc.co.uk/1/hi/programmes/newsnight/8000964.stm
...and the Toyota plug in hybrid
http://news.bbc.co.uk/1/hi/business/7609495.stm