Is the $821 billion that the government would spend on incentive programs and compensation for higher energy prices part of the opportunity cost of producing electricity?
What will be an ideal response?
The incentive programs change what electricity providers buy in order to produce electricity with lower emissions. The goods and services forgone are the opportunity cost of these programs. Compensation for higher energy prices is a transfer payment from taxpayers to consumers. Nothing is forgone and so it is not an opportunity cost.
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If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, then an increase in tolls will result in
A) an increase in total revenue. B) a decrease in total revenue. C) a decrease in non-toll road usage. D) an increase in toll road usage.
Government mandated safety standards within firms
A) will always decrease efficiency. B) can increase efficiency by avoiding a prisoner's dilemma outcome. C) are unnecessary because of asymmetric information. D) will create unfair competition among firms.