QUESTION 34 Heavanly Farms faises a substantial number of bees and uses the hone
ID: 1165928 • Letter: Q
Question
QUESTION 34 Heavanly Farms faises a substantial number of bees and uses the honey to produce its own skin healing cream. Heavanly Farms is situated next to the Oakcreek Apple Orchard. The bees from Heavanly Farms polinate Oakcreek's apple trees In this instance, Heavanly FarmS O derives more private benefits and provides less social benefit Oprovides more social benofits than it derives in private benetts O provides a marginal social beneit and denves a complete private benefit O provides a complete social benoft and derives a marginal private beneftExplanation / Answer
Q 34. (b) In this case where the bees from Heavanly farms pollitate neighbour's apple orchard, heavanly farms provide more social benefit (since it is a positive externality) and derives less private benefit.
Q47. (c)
New cost to Michigan of cleaning the lake = (1100-1200) = -100$
Benefit to New york = $400.
Net cost to New York of cleaning the lake = (800-700) = $100
Benefit to Michigan = 100.
Net cost and net benefit to both states if the lake is clean = 0.
Clearly, Michigan incurs a loss by cleaning the lake and hence would prefer not to do so. On the other hand, New York derives a net benefit of $100 by cleaning the lake and 0 if the lake remains dirty. Thus, New York will clean the lake. Michgan will free ride and attain a benefit of $100 as well.
Q7 and Q8. Please add table for both. Then I will answer in comment box :)