Bob's Bee Emporium makes organic honey, which Bob sells at farmers' markets. The value of his Bee Emporium in its current location is $100,000. Unfortunately, Bob's bee's frequently fly to the neighboring property, Daisy's Daycare Center, and sting the small children, some of whom have allergic reaction to the bee stings. Daisy's Daycare Center business is worth $100,000, before the cost of treating any of the children, which the Daycare Center has to pay. The cost of treating the children for the bee stings is $15,000 Relocating the Bee Emporium would reduce its value by $25,000. Relocating the Daycare Center would cost $10.000. The table below shows the value of the businesses under the above conditions. Daisy's Daycare Center Present Location Relocate Bob's Bee Emporium Present Location $85,000 $90,000 $100,000 $100,000 Relocate $100,000 $90,000 $75,000 $75,000 Which situation is economically efficient? O Daycare remains in present location, bee farm relocates O Daycare remains in present location, bee farm remains in present location O Daycare relocates, bee farm remains in present location O Daycare relocates, bee farm relocates
Bob's Bee Emporium makes organic honey, which Bob sells at farmers' markets. The value of his Bee Emporium in its current location is $100,000. Unfortunately, Bob's bee's frequently fly to the neighboring property, Daisy's Daycare Center, and sting the small children, some of whom have allergic reaction to the bee stings. Daisy's Daycare Center business is worth $100,000, before the cost of treating any of the children, which the Daycare Center has to pay. The cost of treating the children for the bee stings is $15,000 Relocating the Bee Emporium would reduce its value by $25,000. Relocating the Daycare Center would cost $10.000. The table below shows the value of the businesses under the above conditions. Daisy's Daycare Center Present Location Relocate Bob's Bee Emporium Present Location $85,000 $90,000 $100,000 $100,000 Relocate $100,000 $90,000 $75,000 $75,000 Which situation is economically efficient? O Daycare remains in present location, bee farm relocates O Daycare remains in present location, bee farm remains in present location O Daycare relocates, bee farm remains in present location O Daycare relocates, bee farm relocates
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter13: Positive Externalities And Public Goods
Section: Chapter Questions
Problem 23P: HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow...
Related questions
Question
Transcribed Image Text:Bob's Bee Emporium makes organic honey, which Bob sells at farmers' markets. The value of his Bee Emporium in its current location is $100,000. Unfortunately, Bob's bee's frequently fly to the neighboring property, Daisy's Daycare Center, and sting
the small children, some of whom have allergic reaction to the bee stings. Daisy's Daycare Center business is worth $100,000, before the cost of treating any of the children, which the Daycare Center has to pay. The cost of treating the children for the
bee stings is $15.000.
Relocating the Bee Emporium would reduce its value by $25,000. Relocating the Daycare Center would cost $10,000. The table below shows the value of the businesses under the above conditions.
Daisy's Daycare Center
Present Location
Relocate
Bob's Bee Emporium
Present Location
$85,000
$90.000
$100,000
$100,000
Relocate
$100,000
$90.000
S75.000
$75.000
Which situation is economically efficient?
O Daycare remains in present location, bee farm relocates
O Daycare remains in present location, bee farm remains in present location
O Daycare relocates, bee farm remains in present location
Daycare relocates, bee farm relocates
Expert Solution
Step 1
For the above example provided let us use the Pareto criterion for judging economically efficient alternative . Pareto efficient alternatives are referred to those deviating from no person can be made better off without making someone worse-off .
Let us check all four scenarios one by one to check the efficiency .
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Macroeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506756
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning