Question

2. Roundup is a brand of glyphosate-based herbicide made by the Monsanto Company, which is owned by Bayer, Inc., that is widely used in the US to control weeds. In May 2019, a California jury awarded $2 billion to a couple who claimed their cancer (non- Hodgkins lymphoma) was caused by Roundup exposure. This news was widely publicized to the public. Suppose the public reacts to this news by demanding less Roundup at all prices. The federal government also imposes a tax on Roundup to finance cancer research. Model

Answer 1

The imposition of tax on Roundup will affect the supply curve and the knowledge of cancer causing properties of Roundup will affect the demand curve. This will affect the equilibrium price and quantity in the following way:

DATE PAGE No. 7 Pric In this case, both demand and supply in curve shift backwards in equal quantity, Due to this, quantity decreases Hasens, qui litium price remains - the same. Roundup / o o _PY a Quantity of Roundup brice foundup In this case, the change in demand curre is relatiely more than change a in supply wre. Due to this, equilitium pure as hell as equilibrium quantity decrescesa F. XCI a Quantity of Roundup Another case can be drawn where stuft in supply curse is more than the shift in demand curre! due to more reduction in ripply as confered to the demand, our quilibrium quantity will decrease. Howeva, equilibrium price will increase . Creator