What would the optimal government policy be to maximize social welfare?

Suppose the market for Back Yard Bee Hives (for Bee Keeping) has Demand: P = 10006Q and Supply: P = Show more Suppose the market for Back Yard Bee Hives (for Bee Keeping) has Demand: P = 10006Q and Supply: P = 400 + 4Q. Imagine that each Back Yard Bee Hive creates a positive externality of $30 per hive as a result of increased production of local flowers and gardens. At the same time however each hive simultaneously creates a social cost of $10 per hive as a result of an increased rate of bee stings. What would the optimal government policy be to maximize social welfare? Show less

QUICK QUOTE

Approximately 250 words