There Are Two Coal-Burning Electrical Utilities-One in Tiny, Rural Wanunu

Multiple Choice

There are two coal-burning electrical utilities-one in tiny, rural Wanunu, Montana, and another in metropolitan Detroit, Michigan-and each produces the same amount of pollution per unit of output. If a permit tax is going to be used to force these firms to internalize pollution costs, the tax levied should be

A) the same in each city.
B) higher in Wanunu than in Detroit.
C) higher in Detroit than in Wanunu.
D) less than zero in each city.