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)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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