What is the efficient number of beehives to have in orchard

Assignment Help Financial Accounting

Reference no: EM13146280

A beekeeper and the owner of an orange orchard have a synergistic relationship. The beekeeper benefits from putting his beehives in the orchard since his bees make honey from the orange blossom pollen. The orchard owner benefits from having the beehives in his orchard since the bees pollinate his trees. There is a reciprocal positive externality. The table below gives the profit of the beekeeper and the orchard owner as a function of the number of beehives that the beekeeper places in the orchard, before any transfer between them.

0 1 2 3 4 5 6 7

Beekeeper 0 4 8 11 10.5 7 3 -1

Orchard 0 1 2 3 4 5 6 7

Sum 0 5 10 14 14.5 12 9 6

a) What is the efficient number of beehives to have in the orchard? Assume that the above table is common knowledge to both the orchard and beekeeper, that bargaining is costless, and that there are no other orchards or beehive owners.

b) Suppose that the orchard owner has property rights to his orchard, so that the beekeeper has to obtain the orchard owner’s permission to put his beehives in the orchard. What is the equilibrium number of beehives in the orchard? How much will the orchard owner charge to have the beehives in his orchard? Is the equilibrium efficient?

c) Suppose that the beekeeper has the property right to place his beehives in the orchard. What is the equilibrium number of beehives in the orchard? How much will the orchard owner pay the beekeeper? Is the equilibrium efficient?

Reference no: EM13146280

Questions Cloud

Briefly describe the composition of the nucleosome : Briefly describe the composition of the nucleosome. Be sure to mention both the DNA and protein components and higher order structures that can form.

Adjustment to the allowance for doubtful accounts : Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivable basis). If the accounts receivable balance at December 31 was $200,000 what is the required adjustment to the Allowance for Doubtful..

How much should it charge per month for lobster-boat permit : how much should it charge per month for a lobster-boat permit? (Hint: when the fee is F dollars per month, the marginal cost of operating a boat is (2000+F) dollars per month.

Derive the as relationship for economy : Derive the AS relationship for this economy and what are the natural rate of the unemployment and natural level of output and derive the IS relationship for this economy.

What is the efficient number of beehives to have in orchard : What is the efficient number of beehives to have in the orchard? Assume that the above table is common knowledge to both the orchard and beekeeper, that bargaining is costless, and that there are no other orchards or beehive owners.

Electrically initiate the explosion of a small charge : Sodium azide (NaN3) is the chemical used in air bags. Sensors detect the initial crash and electrically initiate the explosion of a small charge of this compound

What are three categories of genes : What are three categories of genes that when mutated can lead to tumor formation? Describe the characteristics of each category.

Calculate the oh- of each aqueous solution : Calculate the OH- of each aqueous solution with the following H3O+ A baking soda 1.1 X 10-8 M B orange juice 2.1 X 10-4

Describe what is meant by a genetic switch : describe what is meant by a "genetic switch". give a known example or design one yourself.

User Account

All Pages