Question

Phoebe's bees help to pollinate the blossoms in the apple orchard, increasing the fruit yield. Show the social marginal benefit from Phoebe's beekeeping in your diagram. Phoebe's bees are Africanized killer bees that aggressively sting anyone who steps into their flight path. Phoebe, fortunately, is naturally immune 10 the bees' venom. Show the social marginal cost curve from Phoebe's beekeeping in your diagram. Indicate the socially optimal quantity of beehives on your diagram. Is it higher or lower than the privately optimal quantity? Explain. Should Phoebe be banned from keeping Africanized killer bees?

Answer 1

In this scenario, the social marginal benefit (SMB) of beekeeping is the additional benefit to society from each beehive added, which is the increase in fruit yield from the orchard. The SMB curve is upward sloping, indicating that the more beehives Phoebe keeps, the greater the benefit to society as a whole.

The social marginal cost (SMC) of beekeeping is the additional cost to society from each beehive added, which is the cost of the stings and potential injuries to people who encounter the aggressive bees. The SMC curve is upward sloping, indicating that the more beehives Phoebe keeps, the greater the cost to society as a whole.

The socially optimal quantity of beehives is where SMB = SMC. This is the point where the additional benefit to society from one more beehive equals the additional cost to society from one more beehive. This quantity is lower than the privately optimal quantity, which is where Marginal Benefit (MB) = Marginal Cost (MC), because the SMC curve takes into account the external costs to society of Phoebe's beekeeping.

Phoebe should not be banned from keeping Africanized killer bees, but she should be required to take measures to minimize the external costs to society. For example, she could place warning signs around her property to alert people to the presence of the aggressive bees, or she could take steps to ensure that the bees do not fly into public areas.