Much of the Nation's Coal Is Extracted by Strip Mining

question 106

Multiple Choice

Much of the nation's coal is extracted by strip mining. This process leaves a huge barren hole in the ground when complete, and the cost of replanting the trees is approximately $10 per ton of coal. Burning the coal for electricity causes air pollution. No one knows how much damage the air pollution causes, but we know that for another $10 per ton the power plant can be outfitted with a pollution control device. What is one measure of the true social cost of coal fired electricity, in dollars per ton?

• A) Private marginal cost plus the $10 replanting charge.
• B) Private marginal cost plus the $10 emission control charge.
• C) Only the $20 of replanting and emission control charges, because the other costs are private, not social.
• D) Private marginal cost plus the $20 of replanting and emission control charges.
• E) In order to answer this question we need to know the dollar value of the pollution.

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Definitions:

Net Unilateral Transfers

Financial flows from one country to another that are not reciprocated, typically covering aid, grants, and remittances.

Financial Account Surplus

A situation where the incoming financial resources (like foreign investments) into a country exceed the resources flowing out of the country.

British Pound

The official currency of the United Kingdom, also known as Sterling, used across the UK and its territories.

Appreciates

An increase in the value of an asset or currency over time, often due to market demand or economic conditions.