Figure 1511 Coal Burning Utilities Release Sulphur Dioxide and Nitric

question 120

Multiple Choice

Figure 15.11 Coal burning utilities release sulphur 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 15.11.
-Refer to Figure 15.11.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 internalise 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 internalise the cost of the externality?

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

---

Definitions:

NSF

An acronym for "Non-Sufficient Funds," indicating that a check cannot be processed due to insufficient money in the account.

Bank Reconciliation

The process of comparing and adjusting a company's financial records to match the transactions recorded by the bank, ensuring accuracy in the accounts.

Bank Reconciliation

The process of matching and comparing figures from accounting records against those presented on a bank statement.

Cash Sales

Transactions in which a customer pays for goods or services at the point of sale with cash, resulting in immediate revenue for the seller.