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Almond tree producers in California are struggling to pollin

Paper help Economics Almond tree producers in California are struggling to pollin

Economics

Almond tree producers in California are struggling to pollin

Almond tree producers in California are struggling to pollinate their trees in the winter. It appear… Show more Almond tree producers in California are struggling to pollinate their trees in the winter. It appears that the introduction of certain pesticides in other crop production has caused a significant loss in bee colonies, the main pollinator. The commodity (almonds) is produced by a monopoly. The market demand curve is downward sloping (i.e., it has the usual negative slope). Production is described by constant returns to scale. In other words, there is no unique size of firm that minimizes average costs. Instead, the industry%u2019s minimum average cost can be achieved by any size of firm. The firm can choose the output that it wants to produce and then, with suitable capacity, it can achieve the same minimum unit cost that can be achieved by firms of other sizes (and different capacities). The monopolist maximizes profits. a. Describe and explain what happens to the monopoly equilibrium (after the monopoly has made all of the profit-maximizing adjustments to the new situation) when the introduction of the pesticides and the associated farming practices causes the cost curves for the monopoly to fall as specified above. b. Does the introduction of the pesticides increase social economic welfare as conventionally measured with total economic surplus%u2014the value, from applying the economy%u2019s scarce economic resources in the industry, above and beyond the opportunity cost of the scarce resources? • Show less

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