A community generates electricity using a coal-fired generator. The demand for electricity generated by the generator...

  

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A community generates electricity using a coal-fired generator. The demand for electricity generated by the generator is given by the equation: P = 90 - 1.5X where X is the number of units of electricity consumed by the community. The cost of generating electricity in this way is $30 per unit. However, a study shows that the generation of electricity using coal-fired generators harms the very same members of the community. The total harm done by the generation of electricity is given by the equation: H = 0.5X² where X is the number of units of electricity consumed by the community and H is the total harm done to community by power generation. Because the individuals in the community suffer from the aggregate consumption of electricity (of which they account for only a small fraction), they have no incentive to reduce their own power consumption. Questions 36 and 37 concern this situation. The socially optimal level of X is: A) 0 F) 22 B) 40 E) 24 15 G) 20 B) $30 E) $2.40 $20 C) 36 G) $1.5 D) 30 H) 18 J) none of the above The socially optimal level of X can be achieved by imposing a Pigovian tax on the consumption of each unit of electricity equal to: A) $3 C) $3.60 D) $24 F) $9 I) H) $0.50 J) none of the above I) A community generates electricity using a coal-fired generator. The demand for electricity generated by the generator is given by the equation: P = 90 - 1.5X where X is the number of units of electricity consumed by the community. The cost of generating electricity in this way is $30 per unit. However, a study shows that the generation of electricity using coal-fired generators harms the very same members of the community. The total harm done by the generation of electricity is given by the equation: H = 0.5X² where X is the number of units of electricity consumed by the community and H is the total harm done to community by power generation. Because the individuals in the community suffer from the aggregate consumption of electricity (of which they account for only a small fraction), they have no incentive to reduce their own power consumption. Questions 36 and 37 concern this situation. The socially optimal level of X is: A) 0 F) 22 B) 40 E) 24 15 G) 20 B) $30 E) $2.40 $20 C) 36 G) $1.5 D) 30 H) 18 J) none of the above The socially optimal level of X can be achieved by imposing a Pigovian tax on the consumption of each unit of electricity equal to: A) $3 C) $3.60 D) $24 F) $9 I) H) $0.50 J) none of the above I)