Question

The city of Lakeland is troubled by its heavy peanut shell pollution problem. Being the home to the largest peanut farming company in the area, the peanut supply is plentiful. Lakeland residents buy peanuts and drop the shells all over the city.

To eliminate the problem, Lakeland has decided to impose a tax on the consumers that buy the peanuts.

As an economist, detail your observations about this story and the effectiveness of this policy.

Answer 1

The given question is about positive impact on society as well as negative impact.

Positive impacts are as follows:-

1. By imposing a tax on the consumers that buy the peanuts, consumers will buy less peanuts than earlier and also environment will be polluted less than before.

2. It will be beneficial for the farmers also because if demand will increase, supply will also increase and price will also increase.

Negative impacts are as follows:-

1. Firstly, on the farmers.Agriculture is the number one industry. It effects every home. Weather and price are two huge factors that vary. Right now inputs costs are huge and continue to increase and commodity price will drop. And if tax will be impose no one will invest more money on peanut which will be loss for farmers.