If coal generated power plants produce a negative externality, taxing the users

Question

If coal generated power plants produce a negative externality, taxing the users of electricity would do which of the following? Shift the private demand curve to the left Shift the private demand curve to the right Shift the private supply curve to the right Shift the private supply curve to the left None of the above A government fee on the per-unit production of a good that causes a negative externality that increases the cost of production is referred to as which of the following? Coasian compensation Pigouvian tax Subsidy License Free-rider problem Complete the following sentence so that it ALWAYS holds true: In the presence of a negative consumption externality, is produced relative to the optimal level. too much too little the right amount any of the above either a or b Sidewalks are which of the following? Excludable but not rival Rival but not excludable Both rival and excludable Neither rival nor excludable Altruistic

Explanation / Answer

17.

Taxing increases cost of production. Once the cost is increased, it reduces supplier’s profit margin and turns the matter into reduction in supply.

The effect of reduction in supply could only be shown if the supply curve moves toward left.

Answer: The right option is d.

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