Suppose the output is kwh of electricity, and each kwh of electricity generates

Question

Suppose the output is kwh of electricity, and each kwh of electricity generates 0.5 tons of CO2. The supply and demand schedules for electricity are as follows:

Pollution demand I

Suppose the pollution price is $50 per ton of CO2. What is the quantity of pollution demanded? (Hint: first figure out how this pollution price translates into a tax for the primary output electricity, then determine the quantity of electricity produced, which will help you finally get the quantity of pollution demanded). ______________tons of CO2?
Please enter 1 digit after the decimal point

Quantity of electricity (kwh) Demand for Electricity (WTP) Supply of Electricity (cost) Quantity of pollution (tons of CO2) 0 100 0 0 1 80 5 0.5 2 60 10 1.0 3 40 15 1.5 4 20 20 2.0 5 0 25 2.5

Explanation / Answer

Cost of 0.5 ton would be $25. Even if you consider just the pollution cost i.e. $25 without including supply cost, demand is zero at that price.

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