Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

How does a dual positive externality lead to an underallocation of resources? I have the following question to answer: An apple grower's orchard provides nectar

How does a dual positive externality lead to an underallocation of resources?

I have the following question to answer: An apple grower's orchard provides nectar to a neighbour's bees, while the beekeeper's bees help the apple grower by pollinating his apple blossoms. How would you characterize such a situation? Explain why this situation might lead to an under-allocation of resources to both apple farming and beekeeping.

It's not clear to me at how this situation leads to an underallocation of resources. In addition, I've looked at examples and I don't understand why the demand curve is being moved when the demand should be unaffected by this situation? Wouldn't this be the supply curve which being moved as a result of the scenario?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Inquiry into Physics

Authors: Vern J. Ostdiek, Donald J. Bord

8th edition

1305959426, 9781337515863 , 978-1305959422

Students also viewed these Economics questions