A coal-fired electric utility has a capacity of producing 500MW of electricity every month. To maximize its profit, the firm produces 400MW of electricity in a month. Kevin Peters, the president of an environmental advocacy group, claims that the production at this utility is inefficient and should be reduced by 200MW. The Environmental Protection Agency (EPA), however, has a different opinion. Although the EPA agrees that production needs to be reduced, it claims that the electric utility need not reduce production by as much as 200 MW.Which of the following, if true, would support Kevin's claim?

A.

The net benefit to society is maximized when the firm produces 500MW of electricity.

B.

The demand curve for electricity intersects the marginal social cost curve at the production level of 400MW.

C.

The marginal social cost of generating the last 200MW of electricity is higher than the marginal social benefit to consumers.

D.

The private cost of electricity generation is equal to the social cost.

E.

Consumer surplus exceeds producer surplus when 400MW of electricity are produced.