The Diagram Below Shows the Supply and Demand Diagrams for the Competitive

question 30

Multiple Choice

The diagram below shows the supply and demand diagrams for the competitive market for honey in one region.MC0 represents private marginal cost and MB0 represents private marginal benefit.
FIGURE 16-3
-Refer to Figure 16-3. Assume there are two types of firms in this region - beekeepers that produce honey and orchard keepers that produce peaches. The bees provide a benefit to the orchard keepers by pollinating their peach trees. We can say that there is a ________ externality in the production of honey. The curve ________represents the ________ marginal benefit of honey.

• A)positive; MB1; social
• B)negative; MB1; private
• C)negative; MB2; social
• D)positive; MB2; social
• E)positive; MB2; private

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Definitions:

Buyer

A person or organization that purchases goods or services.

Law Of Demand

The economic principle stating that, all else being equal, as the price of a good or service decreases, consumer demand for it will increase, and vice versa.

Quantity Demanded

The quantity demanded is the amount of a good or service that consumers are willing and able to purchase at a given price, holding all else constant.

Price

The amount of money required to purchase a good, service, or asset, often influenced by factors like supply and demand.