A coal-fired power station produces electricity worth $40 per unit to consumers. However, for each unit...

 

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A coal-fired power station produces electricity worth $40 per unit to consumers. However, for each unit produced air pollution is produced, costing $20, which is not reflected in the price of electricity paid by consumers. Suppose a Pigovian tax has been implemented to correct the market distortion. In the Social CBA the production of additional electricity should be priced at: $20 per unit of electricity output $40 per unit of electricity output. None of the answers is correct. $60 per unit of electricity output. A coal-fired power station produces electricity worth $40 per unit to consumers. However, for each unit produced air pollution is produced, costing $20, which is not reflected in the price of electricity paid by consumers. Suppose a Pigovian tax has been implemented to correct the market distortion. In the Social CBA the production of additional electricity should be priced at: $20 per unit of electricity output $40 per unit of electricity output. None of the answers is correct. $60 per unit of electricity output.

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