Coal Electricity and Pollution

Answer the following questions to check your understanding of the story.

Coal power creates a _________ because it _________.

a) negative production externality; imposes costs on others than the producer.

b) positive production externality; creates benefits for others than the producer.

c) positive consumption externality; imposes costs on others than the consumer.

d) negative consumption externality; creates benefits for others than the consumer.

MATS in 2012 _________ the gap between private and social cost and moved output _________ the efficient quantity.

a) widened; away from

b) widened; closer to

c) narrowed; closer to

d) narrowed; away from

After the repeal of MATS, there is __________ of electricity using coal.

a) underproduction

b) overproduction

c) no change in production

d) efficient production

After the repeal of MATS, what happens to deadweight loss?

a) The effect is uncertain.

b) It is eliminated.

c) It increases.

d) It decreases.

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