Consider an externality between a beekeeper and almond prodcution from an almond orchard. It costs the beekeeper
Question:
Consider an externality between a beekeeper and almond prodcution from an almond orchard. It costs the beekeeper $25 to maintain each beehive. If the beekeeper places her hives near the almond orchard almond production increases by $10 per hive. The benefit to the beekeeper from placing her hives near the almond orchard is $50 for the first hive, $40 for the second hive, $30 for the third hive, $20 for the fourth hive, $10 for the fifth hive and $0 for any subsequent hives. If the almond orchard buys the beekeeping operation (that is, the two activities are performed by the same firm) what is the number of hives that will be placed near the almond orchard?
(a) 1
(b) 2
(c) 3
(d) 4
(e) 5
Intermediate Microeconomics and Its Application
ISBN: 978-0324599107
11th edition
Authors: walter nicholson, christopher snyder