Consider a beekeeper. The beekeeper has the following production function where the input is the number of hives and the output is quantity of honey produced.

Beehives:1,2,3,4,5,6,7,8,9 ,10,11

Honey:12,23,33,42,50,57,66,71,75,78,80

The cost of installing a beehive is $100 and the price of a unit of honey is $20.Also each beehive increases the output of apples at a nearby apple orchard by $40.

1. What is the efficient number of beehives?

2. If there are barriers to negotiation between the beekeeper and the orchardist, how many will the beekeeper install?

3. What if the same person owned the beehives AND the orchard?How many beehives would that person install?

4. Go back to assuming that the beehives and the orchard are owned by different people.Let's say we want to get the efficient quantity by putting a subsidy on beehives.How much should it be per hive?

5. What if we wanted to subsidize honey instead?How much should that subsidy be per unit? (Round to one decimal place.)

6. On a graph, show the quantity of beehives that the beekeeper will choose if there are barriers to negotiation with the orchardist and show how subsidizing beehives can lead to the efficient quantity.

7. On another graph show how subsidizing honey can lead to the efficient quantity.