An example of how an increase in cost reduces supply and induces exit

More Beekeepers Sour on Profession as Winter Die-Offs Continue
by: Tennille Tracy
Jan 24, 2015
Click here to view the full article on WSJ.com
TOPICS: Microeconomics
SUMMARY: Increasing numbers of beekeepers are considering early retirement or are being forced out of business as honey bees continue to die at alarming rates.
CLASSROOM APPLICATION: Students can evaluate the effect of declining bee populations on the costs to beekeepers of providing pollination services and honey, the prices of pollination services and honey, and the exit of beekeepers from the industry.
QUESTIONS: 
1. (Advanced) What is the effect of the increased death rates of bees on the cost of providing pollination services? What is the effect of the shift in the cost function on the equilibrium price of pollination services?

2. (Advanced) What is the effect of the increased death rates of bees on the price of food products that rely on pollination?

3. (Introductory) What is the effect of the increased death rates of bees on the profits of beekeepers? What is the effect of the change in profit on exit from the beekeeping industry?

Reviewed By: James Dearden, Lehigh University