Why is the market for honey efficient despite the potential problem of pollination externalities?

select one:

a. the quantity of honey that can be produced each year is capped.

b. beekeepers are paid for the pollination services their bees provide, thus internalizing the externality.

c. the government offers a pigouvian subsidy for the production of honey.

d. the government imposes a pigouvian tax on the production of honey.

The correct answer is letter "B": Beekeepers are paid for the pollination services their bees provide, thus internalizing the externality.

Explanation:

Internalizing the externality refers to transferring the obligation (costs) from a negative externality -pollution or congestion in traffic, for instance- from outside to inside. This can be achieved by imposing taxes, property rights, tolls, and subsidies from the state.

(a) when insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal.

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