Use the Table Below to Answer the Following Question

question 52

Multiple Choice

Use the table below to answer the following question.
Table 16.2.3

-Refer to Table 16.2.3. The first two columns of the table show the demand schedule for electricity from a coal burning utility; the second and third columns show the utility's cost of producing electricity. The marginal external cost of the pollution created is equal to the marginal cost.
Suppose the government levies a pollution tax such that the utility generates the efficient quantity of electricity. The pollution tax is ________ cents a kilowatt hour.

• A)2
• B)4
• C)6
• D)8
• E)10

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Definitions:

Common Stock

Equity shares of a corporation, representing ownership interest and giving shareholders voting rights and dividends.

Dividends

Payments made by a corporation to its shareholder members, distributing profits.

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the market price per share by the earnings per share, indicating how much investors are willing to pay per dollar of earnings.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the owners' equity.