Question
Coal-fired electric generating facilities supply kilowatt hours (kwh) of energy according to the following formula: Qs = 50 + P. Generating kwh via burning coal
Coal-fired electric generating facilities supply kilowatt hours (kwh) of energy according to the following formula:
Qs = 50 + P.
Generating kwh via burning coal creates an externality. In this case, the externality is what is known as a "threshold" pollutant, meaning that below some level, emission cause no detectable harm, but harm increases with increasing emissions once the threshold is reached.
The marginal damage function for these emissions is given as
MD = -150 +3 Qs,
where Qs is the quantity of kwh produced by burning coal.
If demand for kwh is given by the equation Qd = 150 - P, what is the net increase in welfare, measured in dollars, that results from restricting output to the efficient level? (Do not include the dollar sign ($) in your answer or Moodle will not recognize it as an answer.)
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