(Choose 1 answer)
(17387) Suppose that electricity producers create a negative externality equal to $6 per unit. Further suppose that the government imposes a $8 per-unit tax on the producers. What is the relationship between the after-tax equilibrium quantity and the socially optimal quantity of electricity to be produced?
A. They are equal.
B. The after-tax equilibrium quantity is greater than the socially optimal quantity.
C. The after-tax equilibrium quantity is less than the socially optimal quantity.
D. There is not enough information to answer the question.
Eatt 4
