Macmillan Learning Pollution from bright city lights makes it nearly impossible to stargaze within a city setting. The supply and demand for electricity used in city lighting are shown in the graph. Suppose the marginal external cost for an additional kilowatt- hour (kWh) of electricity is 5 cents. Drag the endpoints of the blue line to draw in the marginal social cost (MSC) curve for electricity. Place the black dot at the point corresponding to the socially optimal quantity and price for electricity. Assume the government places an optimal Pigouvian tax on electricity used at night to reduce light pollution so that people can enjoy the stars. As a result of the Pigouvian tax, consumers pay a lower price for electricity and producers increase output. consumers pay a lower price for electricity and producers lower output. consumers pay a higher price for electricity and producers lower output. consumers pay a higher price for electricity at night and producers increase output. Price, marginal social cost of electricity (cents/kWh) 50 50 10 40 30 M8C of Light Pollution 20 20 10 0 12 Quantity of electricity (kWh) S D