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?

---

Definitions:

Movement Training

A therapeutic or fitness practice that emphasizes improving physical movements to enhance health and performance.

Endurance Training

A regimen or activity aimed at improving an individual’s ability to sustain prolonged physical effort without fatigue.

Longitudinal Studies

Research designs in which one group of participants is studied over a period of time.

Coronary Heart Disease

A heart condition characterized by the narrowing of the coronary arteries, leading to a diminished blood supply to the heart, often resulting in chest pain or heart attacks.