Case: A beekeeper lives adjacent to an apple orchard. • The orchard owner benefits from the bees because each hive pollinates about one acre of apple trees. The orchard owner pays nothing for this service, however, because the bees come to the orchard without his having to do anything. Because there are not enough bees to pollinate the entire orchard, the orchard owner must complete the pollination by artificial means: o At a cost of $10 per acre of trees o Beekeeping has a marginal cost MC = 10 +5Q, ▪ where is the number of beehives. o Each hive yields $40 worth of honey. Questions: (d) Is a Beekeeper a Price-Taker or a Price-Maker? (e) Why?

Case: A beekeeper lives adjacent to an apple orchard. • The orchard owner benefits from the bees because each hive pollinates about one acre of apple trees. The orchard owner pays nothing for this service, however, because the bees come to the orchard without his having to do anything. Because there are not enough bees to pollinate the entire orchard, the orchard owner must complete the pollination by artificial means: o At a cost of $10 per acre of trees o Beekeeping has a marginal cost MC = 10 +5Q, ▪ where is the number of beehives. o Each hive yields $40 worth of honey. Questions: (d) Is a Beekeeper a Price-Taker or a Price-Maker? (e) Why?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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