Use the graph to answer the following questions:

(a) What is the profit maximizing quantity?

Suppose that there are external costs equal to $0.01 per kilowatt-hour.

(b) Calculate the social marginal cost to produce the profit maximizing quantity.

(c) What is the socially-optimal quantity?

(d) How much of an emission fee should be charged to close the gap between the private and social marginal costs?

Private MC

$0.02 10 30 50 70 90 110 130 150 170 190 210 230

$0.04

$0.06

$0.08

$0.10

$0.12

$0.14 P (= MR)

PRICE OR COST (dollars per kilowatt-hour)

QUANTITY (kilowatt-hours per minute)