The market for honey is:
A) inefficient since beekeepers do not receive compensation for their bees pollinating fruits and vegetables.
B) efficient since farmers pay beekeepers to pollinate their crops, which internalizes the externality.
C) a public goods market.
D) in disequilibrium since the market quantity of honey is less than the socially optimal quantity of honey.

Question

Quizplus · Accepted Answer

Farmers paying beekeepers to pollinate their crops internalizes the externality and leads to an efficient market for honey. This is because the beekeeper's compensation now accounts for both the private and social benefits of the bees' pollination services. The other options are not relevant to the efficiency of the honey market.

The Market for Honey Is