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

question 34

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 MB₂ represents the social marginal benefit of honey,the external benefit associated with producing one unit of honey is

• A)$1.
• B)$2.
• C)$3.
• D)$4.
• E)$5.

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