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The electric utilities also generate sulfur dioxide (SO2) as a byproduct of their production of electricity. SO2 has health consequences, namely particulate matter from these
The electric utilities also generate sulfur dioxide (SO2) as a byproduct of their production of electricity. SO2 has health consequences, namely particulate matter from these emissions can lead to respiratory ailments. SO2 also has ecosystem effects, namely it is a precursor to acid rain. A careful study has been conducted to determine the costs of SO, emissions and the following function describes these costs: Marginal Costs of SO, MCso, = 40s + 4 (c) Calculate the Marginal Social Cost of electricity generation and add it to the graph from part (a) (d) Algebraically solve for the socially efficient level of electricity generation and the socially efficient price. Label this point on your graph. (e) Mathematically calculate the social welfare loss resulting from the externality. Shade in the area of welfare loss on your graph
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