As an illustration of the apple bee externality, suppose that a beekeeper is located nest to a 20- acre apple ochard. Each hive of bees is caable of pollinate 4 acre of apple trees, thereby raising the value of apple output by RM 25. Suppose the market value of the honey from one hive is RM 50 and that the beekeeper's marginal cost are given by MC = 30+0.5 Q Where Q is the number of hives employed. In the absence of any bargaining, how many hives will the beekeeper have and what portion of apple orchard will be pollinated?

As an illustration of the apple bee externality, suppose that a beekeeper is located nest to a 20- acre apple ochard. Each hive of bees is caable of pollinate 4 acre of apple trees, thereby raising the value of apple output by RM 25. Suppose the market value of the honey from one hive is RM 50 and that the beekeeper's marginal cost are given by MC = 30+0.5 Q Where Q is the number of hives employed. In the absence of any bargaining, how many hives will the beekeeper have and what portion of apple orchard will be pollinated?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 41P: Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once...

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Refer to Table 12.2. The externality created by the refrigerator production was 100. However, once we accounted for both the private and additional external costs, the market price increased by only 50. If the external costs were 100 why did the price only increase by 50 when we accounted for all costs?
Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in public. Label the equilibrium private market price and quantity as Pm and Qm. Add whatever is needed to the model to show the impact of the negative externality from second-hand smoking. (Hint: In this case it is the consumers, not the sellers, who are creating the negative externality.) Label the social optimal output and price as Fe and Qe. On the graph, shade in the deadweight loss at the market output.
Do market demand curves reflect positive externalities? Why or why not?
What is a pollution charge and what incentive does it provide for a firm to take external costs into account?
Consider the case of global environmental problems that spill across international borders as a prisoners dilemma of the sort studied in Monopolistic Competition and Oligopoly. Say that there are two countries, A and B. Each country can cheese whether to protect the environment, at a cost of 10, or not to protect it, at a cost of zero. If one country decides to protect the environment, there is a benefit of 16, but the benefit is divided equally between the two countries. If both countries decide to protect the environment, there is a benefit of 32, which is divided equally between the two centuries. In Table 12.10, fill in the costs, benefits, and total payoffs to the countries of the following decisions. Explain why, without some international agreement, they are likely to end up with neither country acting to protect the environment.
A country called Sherwood is very heavily covered with a forest of 50,000 trees. There are proposals to clear some of Sherwoods forest and grow com, but obtaining this additional economic output will have an environmental cost from reducing the number of trees. Table 12.11 shows possible combinations of economic output and environmental protection. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the number of trees, and the quantity of economic output, measured in corn, on the vertical axis. Which choices display productive efficiency? How can you tell? Which choices show allocative efficiency? How can you tell? In the choice between T and R, decide which one is better. Why? In the choice between T and S, can you say which one is better, and why? If you had to guess, which choice would you think is more likely to represent a command-and-control environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice Q or S? Why?
Draw a standard supply and demand diagram for televisions, and indicate the equilibrium price and output. a. Assuming that the production of televisions generates external costs, illustrate the effect of the producers being forced to pay a tax equal to the external costs generated, and indicate the equilibrium output. b. If instead of generating external costs, television production generates external benefits, illustrate the effect of the producers being given a subsidy equal to the external benefits generated, and indicate the equilibrium output.
Identify the following situations as an example of a negative or a positive externality: You are a birder (bird watcher), and your neighbor has put up several birdhouses in the yard as well as planting trees and flowers that attract birds. Your neighbor paints his house a hideous color. Investments in private education raise your countrys standard of living. Trash dumped upstream flows downstream right past your home. Your roommate is a smoker, but you are a nonsmoker.
Suppose that you have an inverse demand curve (Pd = a − bQd) with an intercept of 5 and a slope coefficient of 1. Inverse supply is Ps=c+dQs; c=1 and d=2 There is also a 110% externality on the production of the good i.e. it costs socialy 110% on top of what it costs the firm to make a given unit, so our MSC will have intercept and slope terms that are 110% larger than those on the inverse supply curve. What is the market equilibrium quantity? [please give with two decimals].
Define (a) externalities and (b) sunk costs, andthen give examples of each that might be involvedin a proposal by an energy company to build anew coal-fired electric power generating unit. Howwould these factors be worked into the analysis?
Define externalities. If there is a negative externality at alocal, please propose on how to solve this problem.