Which of the following is NOT a possible way of solving an externality problem of electricity production using coal?   A. A quota of electricity production using coal exactly equal to the production level in the socially optimal allocation.   B. A ban on coal burning, in order to force the use of alternative energy sources.   C. Issue trading rights to burn coal for electricity production, and let a market decide the clearing price for those rights.   D. A per-unit tax on the electricity price equal to marginal external cost of burning coal at the socially efficient allocation.

ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 2.4P
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Which of the following is NOT a possible way of solving an externality problem of electricity production using coal?

 

A. A quota of electricity production using coal exactly equal to the production level in the socially optimal allocation.

 

B. A ban on coal burning, in order to force the use of alternative energy sources.

 

C. Issue trading rights to burn coal for electricity production, and let a market decide the clearing price for those rights.

 

D. A per-unit tax on the electricity price equal to marginal external cost of burning coal at the socially efficient allocation.

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