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2- Suppose the external marginal cost of electricity generation is $3 per megawatt hour; P* is $32, Q* is 200, and QMKTis 225. If the

2- Suppose the external marginal cost of electricity generation is $3 per megawatt hour; P* is $32, Q* is 200, and QMKTis 225. If the government levies a Pigouvian tax of $3, then:

a- the tax will completely eliminate pollution.

b- there will be $600 of pollution damage imposed on bystanders.

c- there will be $675 of pollution damage imposed on bystanders.

d- there will be $3 of pollution damage imposed on bystanders.

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