Question: Answer the following questions.
a. Why would the market overproduce electricity and transportation?
b. How does a carbon tax change the supply of electricity and gasoline? Does it change the demand for electricity and gasoline too? Illustrate your answer with an appropriate graph.
c. At what level should a carbon tax be set to achieve an efficient use of resources?
d. How did British Columbia ensure that its carbon tax didn't damage its overall economy?