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Let MC Be the Marginal Private Cost Per Megawatt Hour

Question 295

Multiple Choice

Let MC be the marginal private cost per megawatt hour (Mwh) of producing electricity using coal. Let MSC be the marginal social cost per Mwh and T be the tax per Mwh. To achieve efficiency, the tax should be set so that


A) MC = MSC + T.
B) MSC = MC + T.
C) MC + MSC = T.
D) MC = T.

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