A beekeeper, Yung, lives next to an apple orchard. She not only benefits from the bees' honey,

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A beekeeper, Yung, lives next to an apple orchard. She not only benefits from the bees' honey, which she sells, but she also creates a positive externality for her apple grower neighbor: Yung's bees help pollinate the apple trees so the apple grower can grow more apples. Yung's total cost and benefit for keeping her bees is the following:

Price per 1000 bees                             27        24        23        21        18        15        12

Quantity of bees demanded               1           2           3         4          5          6          7

Quantity of bees supplied                   9           8          7          6          5          4          3

a. Ignoring the externality, how many bees will be kept?

b. If the apple grower wants to see 6,000 bees kept, what is the value of the externality?

What would have to happen for the socially optimal (including externality) amount of bees to be kept?

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