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Suppose it is estimated that for every $1 spent on fatty fast food that government must increase health expenditure by $0.25 to pay for the

Suppose it is estimated that for every $1 spent on fatty fast food that government must increase health expenditure by $0.25 to pay for the medical treatment caused by its consumption through the Medicare System. The Medicare System is funded by Australian taxpayers.

1.If a Pigouvian Tax could be applied to fatty fast food at what rate should it be set? How would this achieve the Socially Efficient outcome?

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