Phoebe keeps a bee farm next door to an apple orchard. She chooses her optimal number of beehives by selecting the honey output level at which her private marginal benefit from beekeeping equals her private marginal cost.
a. Assume that Phoebe's private marginal benefit and marginal cost curves from beekeeping are normally shaped. Draw a diagram of them.
b. Phoebe's bees help to pollinate the blossoms in the apple orchard, increasing the fruit yield. Show the social marginal benefit from Phoebe's beekeeping in your diagram.
c. Phoebe's bees are Africanized killer bees that aggressively sting anyone who steps into their flight path. Phoebe, fortunately, is naturally immune to the bees' venom. Show the social marginal cost curve from Phoebe's beekeeping in your diagram.
d. Indicate the socially optimal quantity of beehives on your diagram. Is it higher or lower than the privately optimal quantity? Explain.