Taxing and subsidizing output. The inverse demand for coal-fired electricity is: P(Q) = 6 2Q where Q is megawatt hours of electricity. The marginal…

Taxing and subsidizing output. The inverse demand for coal-fired electricity is:

P(Q) = 6 − 2Q

where Q is megawatt hours of electricity. The marginal costs of producing electricity (aka supply) are:

MC(Q) = Q

In addition to providing benefits to consumers, electricity generation also leads

to harmful emissions of sulfur and mercury. These emissions cause health

problems which lead to reduced productivity, and degrade the environment.

Economists have estimated that the marginal damages from electricity generation are:

MD(Q) = 0.5Q

a) Compute the market outcome. Would an unregulated market ever produce

less than 2 megawatt hours? Why or why not?

b) Compute the efficient quantity of electricity generation. What are marginal

damages at the efficient quantity?

c) Suppose the Department of Energy decides to subsidize coal electricity generation (this policy is under serious consideration.) How would this affect the marginal cost of producing coal? Will this lead an efficient outcome?Why or why not? What should be done to achieve an efficient quantity of electricity?

Show more







Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10