Honey bees are one of the foremost natural pollinators. Therefore, if someone keeps them for their honey, then a positive externality is created for flower growers. Suppose that a beekeeper who sells honey also creates a $1 positive externality for all the flower growers.
a. Draw a supply and demand graph that clearly marks the following:
1) marginal private benefit curve
2) marginal social benefit curve
3) marginal cost curve (assume that private and social costs are the same)
b. On the graph, mark the points that show the free-market equilibrium and the socially optimal level of price and quantity.
c. Mark the area of deadweight loss, and explain why the free-market equilibrium leads to a deadweight loss.
d. Provide one remedy for the negative externality associated with the production of plastic.

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The Answer of Honey bees are one of the foremost natural pollinators. Therefore, if someone keeps them for their honey, then a positive externality is created for flower growers. Suppose that a beekeeper who sells honey also creates a $1 positive externality for all the flower growers.
a. Draw a supply and demand graph that clearly marks the following:
1) marginal private benefit curve
2) marginal social benefit curve
3) marginal cost curve (assume that private and social costs are the same)
b. On the graph, mark the points that show the free-market equilibrium and the socially optimal level of price and quantity.
c. Mark the area of deadweight loss, and explain why the free-market equilibrium leads to a deadweight loss.
d. Provide one remedy for the negative externality associated with the production of plastic.

Honey Bees Are One of the Foremost Natural Pollinators