Question

question 45
a beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. a
positive externality that can result is
a the cost of the bee hives to the beekeeper.
b the possibility of the bees stinging the students at the school.
c the bees helping to pollinate the orchard, leading to more fruit.
d the honey the bees produce.

question 46
a would lead a large greenhouse gas emitter to reduce emissions by less.
a flat charge
b higher pollution tax
c lower pollution tax
d pollution tax

Explanation:

Question 45

A positive externality is a benefit that a third - party (not directly involved in the transaction) receives.

• Option A: The cost of bee hives is a private cost to the beekeeper, not an externality.
• Option B: The possibility of bee stings is a negative externality (harm to students).
• Option C: The bees pollinating the orchard (a benefit to the orchard owner, a third - party) is a positive externality.
• Option D: The honey produced is a private benefit to the beekeeper.

A pollution tax is a cost imposed on emitters. A lower pollution tax means that the cost of emitting an additional unit of greenhouse gas is lower. So, a large emitter will find it less costly to emit (compared to a higher tax) and will reduce emissions by less.

• A flat charge is not as directly related to the marginal decision of reducing emissions as a per - unit tax.
• A higher pollution tax would incentivize more reduction.
• Just saying “pollution tax” is too general.

Answer:

C. the bees helping to pollinate the orchard, leading to more fruit.

Question 46