Consider an Oil Company Extracting Oil from the Oil Sands

question 88

Multiple Choice

Consider an oil company extracting oil from the Oil Sands in Northern Alberta.The production process generates greenhouse-gas emissions.At the socially optimal level of oil extraction,

• A)the level of emissions will be zero.
• B)the marginal cost of the emissions will be equal to the social marginal benefit derived from the extracted oil.
• C)the marginal cost of the emissions will be more than the social marginal benefit derived from the extracted oil.
• D)the social marginal cost of the oil extraction will be equal to its social marginal benefit.
• E)the social marginal cost of the oil extraction will exceed its social marginal benefit.

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