Economics 9708 · AS & A Level · Maximum and minimum prices

Maximum and minimum prices — practice question

A community depends on a private company for its electricity supply from a coal-fired power station. The station produces air pollution, creating an external cost that is illustrated in the diagram. The government chooses to levy a tax on the electricity company in order to correct market failure. What represents the tax?

  • AWX
  • BWY
  • CXY
  • DYZ

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