A carbon tax placed on coal
A) would decrease the price of coal.
B) would cause some producers to switch to other forms of energy.
C) is unlikely to affect the demand for alternative forms of energy.
D) would increase the quantity of coal demanded at every price.

Question

Quizplus · Accepted Answer

A carbon tax on coal would increase the cost of using coal as an energy source. This would give incentives for some producers to switch to other forms of energy that are less expensive. However, it is unlikely to affect the demand for alternative forms of energy in the short run, as it takes time for consumers to switch to new technologies. The tax is also expected to decrease the quantity of coal demanded at every price, as consumers look for cheaper alternatives.

A Carbon Tax Placed on Coal