Many environmentally conscious policymakers oppose the $6 billion project  that would run from the fracking fields of West Virginia through Virginia and down  North Carolina’s I-95 corridor to the state’s southern border. They consider it a  monument to fossil fuel dependency that will contribute to climate change and  environmental degradation.

One solution would be to tax the power companies on their production of energy from the  pipeline. If they were to do so, the governor and the General Assembly could decide how  to spend the money through the appropriation process.  

a. Draw a supply and demand curve for energy. Assume that demand  curve for energy is more inelastic (more vertical) relative to the supply curve  for energy.

b.  Now, assume that a tax is assessed on power companies (i.e., the  suppliers) to help compensate those affected by the fracking. Reflect this  policy change your diagram from (b).  

c.  Now label the portion of the tax paid by the power companies (i.e.  the suppliers) and the portion of the tax paid by energy consumers. Who pays  more of the tax? Why?

Answer rating: 100% (QA)

B This figure shows demand for and supply curve of energy The demand energy is inel... View the full answer