4. Farmer Jones and Farmer Smith graze their cattle on the same field. If there are 20 cows grazing in the field, each cow produces $4,000 of milk over its lifetime. If there are more cows in the field, then each cow can eat less grass, and its milk production falls. With 30 cows on the field, each produces $3,000 of milk; 40 cows, each produces $2,000 of milk. Cows cost $1,000 a piece. a. b. C. Assume that Farmer Jones and Farmer Smith can each purchase either 10 or 20 cows but that neither knows how many the other is buying when she makes her purchase. Calculate the payoffs of each outcome. What is the likely outcome of this game? What would be the best outcome? Explain. There used to be more common fields than there are today. Why? (Hint: we talked about "The Tragedy of the Commons" in lecture)

4. Farmer Jones and Farmer Smith graze their cattle on the same field. If there are 20 cows grazing in the field, each cow produces $4,000 of milk over its lifetime. If there are more cows in the field, then each cow can eat less grass, and its milk production falls. With 30 cows on the field, each produces $3,000 of milk; 40 cows, each produces $2,000 of milk. Cows cost $1,000 a piece. a. b. C. Assume that Farmer Jones and Farmer Smith can each purchase either 10 or 20 cows but that neither knows how many the other is buying when she makes her purchase. Calculate the payoffs of each outcome. What is the likely outcome of this game? What would be the best outcome? Explain. There used to be more common fields than there are today. Why? (Hint: we talked about "The Tragedy of the Commons" in lecture)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 11SCQ: The state of Colorado requires oil and gas companies who use fracking techniques to retune the land...

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1.The prairie dog has always been considered a problem for American cattle ranchers. They dig holes that cattle and horses can step in and they eat grass necessary for cattle. Recently, ranchers have discovered that there is a demand for prairie dogs as pets. In some areas prairie dogs can sell for as high as $150. Cattlemen are now fencing off prairie dog towns on their land so these towns will not be disturbed by their cattle.Draw a production possibilities frontier showing a rancher's production option between cattle production and prairie dog production showing increasing opportunity cost and show what would happen in each of the following situations. (Use a separate graph for each situation.)a. The outcome is efficient, with ranchers choosing to produce equal numbers of cattle and prairie dogs. b. As a protest against the government introducing the gray wolf back into the wild in their state, ranchers decide not to use 25% of the available grassland for grazing. c. The price of…
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