📚 Learning Guide
Positive Externalities in Production
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If a local beekeeping business increases its production, resulting in more flowers blooming in the surrounding area, what is the most likely underlying cause of this positive externality?

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Choose the Best Answer

A

The bees pollinate plants, enhancing their growth.

B

The beekeepers sell honey at lower prices.

C

The local government provides subsidies to beekeepers.

D

Customers are buying more honey, increasing demand.

Understanding the Answer

Let's break down why this is correct

Answer

When a local beekeeping business increases its production, it means they are keeping more bees. Bees play a crucial role in pollinating flowers, which helps plants grow and produce fruits and seeds. As more flowers bloom due to the increased bee activity, this creates a positive externality, meaning there are benefits for the environment and the community that the beekeepers did not directly intend. For example, a farmer nearby might notice that their crops yield more produce because the bees are helping pollinate their plants. Overall, the beekeeping business not only benefits from selling more honey but also supports the health of the local ecosystem.

Detailed Explanation

Bees help plants grow by spreading pollen. Other options are incorrect because Lower honey prices do not directly help flowers; Subsidies are money from the government.

Key Concepts

Positive externalities in production
Pollination benefits to third parties
Government subsidies
Topic

Positive Externalities in Production

Difficulty

medium level question

Cognitive Level

understand

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