Question: Phoebe keeps a bee farm next door to an apple orchard. She chooses her optimal number of beehives by selecting the honey output level at

Phoebe keeps a bee farm next door to an apple orchard. She chooses her optimal number of beehives by selecting the honey output level at which her private marginal benefit from beekeeping equals her private marginal cost.
a. Assume that Phoebe's private marginal benefit and marginal cost curves from beekeeping are normally shaped. Draw a diagram of them.
b. Phoebe's bees help to pollinate the blossoms in the apple orchard, increasing the fruit yield. Show the social marginal benefit from Phoebe's beekeeping in your diagram.
c. Phoebe's bees are Africanized killer bees that aggressively sting anyone who steps into their flight path. Phoebe, fortunately, is naturally immune to the bees' venom. Show the social marginal cost curve from Phoebe's beekeeping in your diagram.
d. Indicate the socially optimal quantity of beehives on your diagram. Is it higher or lower than the privately optimal quantity? Explain.

Step by Step Solution

★★★★★

3.28 Rating (169 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The graphs for all four parts of the question are as follows The socially optimal number of beehives ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

659-B-E-D-S (313).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

A beekeeper, Yung, lives next to an apple orchard. She not only benefits from the bees' honey, which she sells, but she also creates a positive externality for her apple grower neighbor: Yung's bees...

What type of externality (positive or negative) is present in each of the following examples? Is the marginal social benefit of the activity greater than or equal to the marginal benefit to the...

A beekeeper lives adjacent to an apple orchard. The orchard owner benefits from the bees because each hive pollinates about one acre of apple trees. The orchard owner pays nothing for this service,...

2. Phoebe keeps a bee farm next door to an apple orchard. She chooses her optimal number of beehives by selecting the honey output level at which her private marginal benefit from beekeeping equals...

63Alice keeps a bee farm next to an apple orchard. She chooses the optimal number of hives by selecting the honey output level that maximizes her profit. Alice's bees help to pollinate the blossoms...

Alice keeps a bee farm next to an apple orchard. She chooses the optimal number of hives by selecting the honey output level that maximizes her profit. Alice's bees help to pollinate the blossoms in...

Given the following load summary chart, design a layout on a 2 x 3 grid that will minimize nonadjacentloads. Load Summary Chart 50 25 - 20 100 30 10 75 40 60

It is December 2017. A change in tax regulation decreasing the corporate income tax rates by 14% is being contemplated. As a result, the highest marginal corporate income tax rate is expected to...

Choose a leisure or tourism organisation and investigate its research activities. What proportion of its budget does it devote to research? What research has it carried out? How are the results of...

21.1 Which of the following items may appear as current liabilities in a company's statement of financial position? 1 Revaluation surplus 2 Loan due for repayment within one year 3 Taxation 4...

If the price in a market is above the equilibrium price, does this create a surplus or a shortage?

Suppose the market for batteries looks as follows: What are the equilibrium price and quantity? Price $7 4t 2 10 20 30 Supply Demand Quantity

Do taxes usually increase the supply of a good or reduce the supply?

A corporation in a 40% tax bracket invests in the preferred stock of another company and earns a 5% pretax rate of return. An individual investor in a 20% tax bracket invests in the same preferred...

Notice this study used the verbal answer from each subject to measure the cocaine use status after six weeks of treatment. It has been argued that verbal reporting of cocaine use will cause subjects...

You have the following expectations about market returns and interest rates on T-bills: T-Bill Rate Market Rate Probability RF Probability MR 0.1 0.02 0.1 -0.1 0.2 0.03 0.3 0.15 0.4 0.06 0.3 0.33 0.2...