Coal-fired electric generating facilities supply kilowatt hours (kwh) of energy according to the following formula: Qs = 50 + P. Generating kwh via burning coal creates an externality. In this case, the externality is what is known as a "threshold" pollutant, meaning that below some level, emission cause no detectable harm, but harm increases with increasing emissions once the threshold is reached. The marginal damage function for these emissions is given as MD = -150 +3 Qs, where Qs is the quantity of kwh produced by burning coal. Given that the social marginal cost function (SMC) is a linear function of the form SMC = a +bQs,
Coal-fired electric generating facilities supply kilowatt hours (kwh) of energy according to the following formula: Qs = 50 + P. Generating kwh via burning coal creates an externality. In this case, the externality is what is known as a "threshold" pollutant, meaning that below some level, emission cause no detectable harm, but harm increases with increasing emissions once the threshold is reached. The marginal damage function for these emissions is given as MD = -150 +3 Qs, where Qs is the quantity of kwh produced by burning coal. Given that the social marginal cost function (SMC) is a linear function of the form SMC = a +bQs,
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter12: Environmental Protection And Negative Externalities
Section: Chapter Questions
Problem 40P: Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in...
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Transcribed Image Text:Coal-fired electric generating facilities
supply kilowatt hours (kwh) of energy
according to the following formula:
Qs = 50 + P.
Generating kwh via burning coal creates
an externality. In this case, the
externality is what is known as a
"threshold" pollutant, meaning that
below some level, emission cause no
detectable harm, but harm increases
with increasing emissions once the
threshold is reached.
The marginal damage function for these
emissions is given as
MD = -150 +3 Qs,
where Qs is the quantity of kwh
produced by burning coal.
Given that the social marginal cost
function (SMC) is a linear function of the
form
SMC = a + bQs,
what is the value of the constant, a?
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