Honey Orchard
Please help me with this Economics Question.
Question: To encourage the production of honey, several beekeepers place their beehives in a farmer’s orchards and fields. As the bees gather nectar to make honey, they pollinate the orchards and fields, thereby increasing the yields of the fruit and grain crops. This arrangement results in:
Possible Answers:
a) a positive externality that benefits the farmer.
b) no significant additional benefit to anyone.
c) a positive externality that benefits the consumer.
d) a negative externality for which the farmer should be compensated.
I think that “C” is the answer, but not sure. Please help. Thanks.
a) a positive externality that benefits the farmer.
The farmer benefits because he can produce more fruit and grain at no additional cost. The consumer benefits from (marginally) lower prices, but lower prices are not considered an externality in this case.
The Honey Trees – Orchard
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