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

question 20

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.If the government subsidizes the beekeepers so as to fully internalize the externality,the equilibrium price of honey would be ________ and the allocatively efficient output would be ________.

• A)3; 80
• B)5; 100
• C)7; 100
• D)9; 60
• E)11; 80

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Definitions:

Iron Law of Responsibility

The principle that businesses and organizations must act in a socially responsible way to maintain their societal legitimacy and ensure long-term success.

Socioeconomic

Relating to or concerned with the interaction of social and economic factors, often used to describe the social standing or class of an individual or group.

Neo-capitalist

A term referring to the modern or new form of capitalism that includes a mix of traditional capitalist principles and innovative practices or policies.

Socially Responsible Organizations

Organizations that operate in a manner that enhances society and the environment, beyond the interests of the company and legal requirements.