The marginal social cost of each kilogram of shrimp is equal to the ideal Pigouvian tax.
A Pigovian tax is a charge levied on any market activity that has negative externalities. The tax is usually imposed by the government to fix an undesired or inefficient market outcome, and it is equivalent to the external marginal cost of the negative externalities. When there are negative externalities, the social cost comprises both the private cost and the external cost generated by the negative externalities. This signifies that the private cost of a market activity does not cover the social cost of the activity. In such a circumstance, the market outcome is inefficient and may result in excessive product consumption. Environmental pollution and increased public healthcare expenses connected with the cigarette and sugary drink usage are frequently cited instances of negative externalities.
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