Coal produced by strip mining leaves the area that has been mined unusable. To restore the area to its original state costs approximately $10 for every ton mined. Using the coal to generate electricity causes air pollution. To outfit the electric power plant with pollution control devices costs another $10 per ton. The social cost of coal-firedel ectricity then includes
A) private cost plus the externality costs associated with mining
B) private cost plus the externality costs associated with pollution control
C) the externality costs associated with mining and pollution control
D) private cost plus the externality costs associated with mining and pollution control
E) just the private cost because the externality costs are incorporated in it

Question

Quizplus · Accepted Answer

The social cost of coal-fired electricity includes both the private costs incurred by the company (such as extraction, processing, and transportation) and the external costs (externalities) that are not borne by the coal company but by society. These externalities include the environmental damage from strip mining and the air pollution from burning coal. Therefore, the correct answer includes both the private cost and the externality costs associated with mining and pollution control.

Coal Produced by Strip Mining Leaves the Area That Has