Suppose Unregulated Production of Pesticides Results in an Equilibrium Price

question 185

Essay

Suppose unregulated production of pesticides results in an equilibrium price and quantity of $400 and 1,000 tons per day, respectively, and a marginal external cost of $10 a ton.
a) If the government were to eliminate the external cost by using taxes, what should the tax equal?
b) Would the government action described above affect the quantity of pesticides produced? If yes, how? If no, why not?

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Definitions:

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The provision of education that meets the expected standards and requirements for learning and development.

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A form of instruction and learning that occurs within the work environment, aiming to equip employees with the necessary skills for their specific roles.