Question
The table below displays the private marginal benefit and the private marginal cost for Sam's Flower Farm. Sam's Flower Farm produces wild flowers. Each acre
The table below displays the private marginal benefit and the private marginal cost for Sam's Flower Farm. Sam's Flower Farm produces wild flowers. Each acre produces $550 worth of flowers per month. Sam's farm also serves as a local attraction for tourists looking to view birds and butterflies increasing the revenues of local businesses by $50 per month (Note: the social marginal cost is the same as the private marginal cost).
Quantity (acres) | MC Private | MB Private |
100 | $450 | $550 |
200 | 500 | 550 |
300 | 550 | 550 |
400 | 600 | 550 |
500 | 650 | 550 |
What is the socially efficient number of acres for Sam to plant if all costs and benefits are considered?
300 acres
400 acres
200 acres
100 acres
explain
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