The diagram below shows the supply and demand diagrams for the competitive market for honey in one region.MC0 represents private marginal cost and MB0 represents private marginal benefit.
FIGURE 16- 3
-Refer to Figure 16- 3.Assume there are two types of firms in this region - beekeepers that produce honey and orchard keepers that produce peaches.The bees provide a benefit to the orchard keepers by pollinating their peach trees.We can say that there is a _ externality in the production of honey.The curve represents the _ marginal benefit of honey.

Question

The diagram below shows the supply and demand diagrams for the competitive market for honey in one region.MC0 represents private marginal cost and MB0 represents private marginal benefit.
  FIGURE 16- 3
-Refer to Figure 16- 3.Assume there are two types of firms in this region - beekeepers that produce honey and orchard keepers that produce peaches.The bees provide a benefit to the orchard keepers by pollinating their peach trees.We can say that there is a _ externality in the production of honey.The curve represents the _ marginal benefit of honey.

Quizplus · Accepted Answer

The bees provide a benefit to the orchard keepers by pollinating their peach trees. This is a positive externality, as the orchard keepers benefit from the bees' pollination without having to pay for it. The curve MB2 represents the social marginal benefit of honey, which includes both the private benefit to the beekeepers and the external benefit to the orchard keepers.

The Diagram Below Shows the Supply and Demand Diagrams for the Competitive