Question

In: Economics

A beekeeper and a farmer with a 10 acre apple orchard are neighbors. This is convenient...

A beekeeper and a farmer with a 10 acre apple orchard are neighbors. This is convenient for the orchard owner since the bees pollinate the apple trees. One beehive can pollinate one acre of orchards. If the orchard owner had to buy pollination services on the market, it would cost $10 per acre. The beekeeper has total cost of TC = H2 + 10H and marginal costs of MC = 10 + 2H, where H is the number of hives. Each hive yields (a marginal revenue of) $20 worth of honey.

A.) How many hives would the beekeeper maintain if operating independently of the farmer?

B.) What is the socially efficient number of hives, taking into account the marginal external benefit that each hive produces?

C.) In the absence of transaction costs, what outcome do you expect to arise from bargaining between the beekeeper and the farmer? (Hint: This involves comparing the additional benefit, accruing to the farmer, with the additional costs, accruing to the beekeeper.)

D.) How high would total transaction costs have to be to erase all gains from bargaining?

Solutions

Expert Solution

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

A farmer estimates that a 50 acre peach orchard will require an initial investment of $25,000...
A farmer estimates that a 50 acre peach orchard will require an initial investment of $25,000 for soil preparation and tree purchase and planting costs. Assume the farmer already owns the land that the orchard will be planted on. After planting, cash outflows are expected in years 1-3 as the young trees are established and produce no harvestable crops. Assume outflows of $10,000, $5000, and $5000 in years 1 through 3, respectively. In years 4 and 5 production will occur...
A farmer estimates that a 50 acre peach orchard will require an initial investment of $25,000...
A farmer estimates that a 50 acre peach orchard will require an initial investment of $25,000 for soil preparation and tree purchase and planting costs. Assume the farmer already owns the land that the orchard will be planted on. After planting, cash outflows are expected in years 1-3 as the young trees are established and produce no harvestable crops. Assume outflows of $10,000, $5000, and $5000 in years 1 through 3, respectively. In years 4 and 5 production will occur...
An apple orchard farmer wants to know the true population proportion of all apples harvested at...
An apple orchard farmer wants to know the true population proportion of all apples harvested at their farm which have the less valuable condition of being blemished, or in other words, are cider apples. This true population proportion is a parameter value represented by the symbol p. As a population parameter, this value can never be known with certainty. It can however, be estimated with varying levels of confidence. To estimate this parameter p, the farmer draws a simple random...
You are considering the purchase of 10 acres to plant an apple orchard. The land is...
You are considering the purchase of 10 acres to plant an apple orchard. The land is priced at $17,500/acre and it will cost $65,000 to plant the trees and install the irrigation system. Based on your research, you won't be producing enough apples to sell until year 5. From then on you estimate your net returns will be $45,000 a year. If you plan on operating the orchard for 15 years, what is your NPV? Assume that the land appreciates...
Identify the sampling method for each scenario. (a) An orchard farmer subdivides his orchard into 40...
Identify the sampling method for each scenario. (a) An orchard farmer subdivides his orchard into 40 parcels of land. He randomly selects 4 parcels and inspects every tree on those parcels for the presence of a particular fungus. (b) A librarian inspects every fifth book on a shelf starting with the second to determine the number of items missing bar codes. (c) A hotel leaves customer satisfaction cards in each guest room. At the end of the week, the general...
A farmer has a 100-acre farm on which to plant watermelons and cantaloupes. Every acre with...
A farmer has a 100-acre farm on which to plant watermelons and cantaloupes. Every acre with watermelons requires 50 gallons of water per day and must be prepared for planting with 20 pounds of fertilizer. Every acre with cantaloupes requires 75 gallons of water per day and must be prepared for planting with 15 pounds of fertilizer. The farmer estimates that it will take 2 hours of labor to harvest each acre planted with watermelons and 2.5 hours to harvest...
You are a manager of an apple orchard. For harvesting apple, you need to hire some workers.
You are a manager of an apple orchard. For harvesting apple, you need to hire some workers. Worker is the variable factor and per worker wage is $40/day. Fixed cost of the orchard is $10 per day. You have been given the following information in relation to your apple harvesting: Workers per day Harvesting kg per day 0 0 1 100 2 275 3 460 4 620 5 755 6 860 7 920 8 960 a) Calculate marginal cost, average...
Case Study Pink Lady Apple Orchard is a small family run orchard in Red Hill, Victoria....
Case Study Pink Lady Apple Orchard is a small family run orchard in Red Hill, Victoria. Jacinta and Pete own the property, which includes 50 hectares of apple plantings. As the market price of apples sold to supermarkets and fruit shops has decreased in the past few years, causing business to stagnate, Pete and Jacinta have decided to use some of their apple supply to produce their own range of apple based products. They have set up a small market...
Farmer Brian has 3 acres of land which he farms efficiently. Each acre can support 10...
Farmer Brian has 3 acres of land which he farms efficiently. Each acre can support 10 apple trees. However the 3 acres differ in their ability to support orange trees. He can grow 60 orange trees on the best land, 40 orange trees on the ok land, and 20 orange trees on the bad land. If he initially is using 2 acres to grow apples, what would be the opportunity cost of growing another orange tree? At first I assumed...
20-acre raisin vineyard has possibly been exposed to a pesticide used on a neighboring peach orchard...
20-acre raisin vineyard has possibly been exposed to a pesticide used on a neighboring peach orchard (after the harvest of the peaches but prior to the harvest of the raisins). Your task is to determine the level of pesticide exposure for the entire field using HPLC. Devise a sampling methodology to ensure a representative sample and devise a preparation method that will yield several 10-microlitre solutions for injection into the HPLC.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT