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:

Exact Simple Interest

Interest calculated on the principal amount of a loan or investment, considering the exact number of days in the interest period.

365-Day Year

A standard year length used in some financial calculations, ignoring leap years.

Exact Simple Interest

Interest calculated precisely based on the principal amount, a fixed interest rate, and the number of days between payments.

365-Day Year

A method used in finance that assumes all years have 365 days for the purpose of interest calculation.