Consider a honey farm located next to an apple orchard. The cost function of the honey farm iscH(H)=H2

and the marginal cost of honey isMCH(H)=2H

, where H is the amount of honey. The cost function of the apple orchard iscA(A,H)=A2AH

, and its marginal cost of apples isMCA(A)=2AH

, where A is the amount of apples. The price of honey ispH=2

, and the price of apples ispA=2

. If the firms stayed separate and the honey farm did not receive any subsidy, by how much the apple production would have to be subsidized to induce the socially optimal apple supply?

Group of answer choices

4

neither one is correct

6

1

8