Suppose a new pollution tax of $0.01 per kilowatt-hour of electricity is imposed on coal-fired power producers by the federal government. Which of the following correctly describes how this tax will affect the market for electricity served by these power plants?

a. The supply of electricity will increase.
b. The supply of electricity will decrease.
c. Demand for electricity will increase.
d. Demand for electricity will decrease.


b

Economics

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