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Coal Electricity and Pollution

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In 2012, the EPA introduced Mercury and Air Toxics Standards (MATS), which require pollution-control equipment to limit toxic air pollution from coal power plants. In 2026, the EPA proposed repealing parts of MATS, saying the rules raise electricity costs and limit supply. Critics warn that removing the rules will harm public health.—eia.gov and wri.org

 

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

Coal power creates a _________ because it _________.

Wrong! - Pollution creates costs, not benefits. The harm comes from producing electricity, not consuming it. A positive externality does not impose costs.

Well Done! - Pollution harms people who are not part of the market transaction.

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

Wrong! - The gap does not widen with regulation. When costs align, output moves toward efficiency.

Good Job! - Pollution controls raise private cost toward social cost and reduce overproduction.

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

Wrong! - Output would increase, not decrease.  Repeal moves the market away from efficiency.

That's Right! - Removing controls lowers private cost below social cost, increasing output above the efficient level.

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

Wrong! - Deadweight loss is zero only at the efficient quantity. More overproduction does not decrease deadweight loss. Ignoring external costs predictably increases deadweight loss.

Correct! - More overproduction increases deadweight loss.

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