Table 1 shows the demand schedule for electricity from a coal burning utility.

Table 2 shows the utility's cost of producing electricity and the external cost of the pollution created.

  

If the government levies a pollution tax such that the utility generates the efficient quantity of electricity, calculate the quantity of electricity generated, the price of electricity, the size of the pollution tax, and the tax revenue.

The quantity of electricity generated is ? kilowatts a day and the price of electricity is ? cents a kilowatt.

Table 1

Price	Quantity demanded
(cents per kilowatt)	(kilowatts per day)
4	500
8	400
12	300
16	200
20	100
24	0

   

Table 2

Quantity (kilowatts perday)	Marginal cost	Marginal external cost
	(cents per kilowatt)
0	0	0
100	2	2
200	4	4
300	6	6
400	8	8
500	10	10

Answer rating: 100% (QA)

According to the table 2 data utility cost and external cost c... View the full answer