Figure 5-11 Coal Burning Utilities Release Sulfur Dioxide and Nitric Acid Which

question 9

Multiple Choice

Figure 5-11

Coal burning utilities release sulfur dioxide and nitric acid which react with water to produce acid rain.Acid rain damages trees and crops and kills fish.Because the utilities do not bear the cost of the acid rain, they overproduce the quantity of electricity.This is illustrated in Figure 5-11.
-Refer to Figure 5-11.S₁ represents the supply curve that reflects the private cost of production and S₂ represents the supply curve that reflects the social cost of production.One way to internalize the external cost generated by utilities is to impose a Pigovian tax on the production of electricity.What is the size of the Pigovian tax that will internalize the cost of the externality?

• A)P₀
• B)P₂ - P₀
• C)P₁ - P₀
• D)P₂ - P₁

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Definitions:

Adaptive Behaviour

The ability of an individual to adjust and manage themselves in their social environment, crucial for psychological and social development.

Hallucinations

Perceptions in a conscious and awake state in the absence of external stimuli that have qualities of real perception.

Stimuli

External factors or events that provoke a response from the sensory system or an organism.

Perceives

The process by which an individual becomes aware of or interprets sensory information.