Economics 9708 · AS & A Level · 7.4

7.4 — practice question

A community depends on a private firm for its electricity supply, and this electricity is generated by a coal-fired power station. The station produces air pollution, creating an external cost that is shown in the diagram. The government decides to levy a tax on the electricity company in order to correct market failure. Which option represents the tax?

  • AWX
  • BWY
  • CXY
  • DYZ

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