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.
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.
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 2.4P
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Question
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
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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