Suppose there are 100 farmers each with 10 acres that overlie a common groundwater aquifer. They all have identical farmland that is more productive if wells are used to pump the groundwater for irrigation. They all face a marginal cost of $10 per well. The average productivity (in $ of crop output) of the wells of the common aquifer is given by AP = 100 – W where W is the number of wells drilled into the aquifer. 1a. Assume farmers act on their own how many wells will be drilled and how much rent will the aquifer generate. A. 45; 2025 B. 90; 2025 C. 60; 1000 D. 90; 0 E. 45; 0 F. None of the above
Suppose there are 100 farmers each with 10 acres that overlie a common groundwater aquifer. They all have identical farmland that is more productive if wells are used to pump the groundwater for irrigation. They all face a marginal cost of $10 per well. The average productivity (in $ of crop output) of the wells of the common aquifer is given by AP = 100 – W where W is the number of wells drilled into the aquifer. 1a. Assume farmers act on their own how many wells will be drilled and how much rent will the aquifer generate. A. 45; 2025 B. 90; 2025 C. 60; 1000 D. 90; 0 E. 45; 0 F. None of the above
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose there are 100 farmers each with 10 acres that overlie a common groundwater aquifer. They all have identical farmland that is more productive if wells are used to pump the groundwater for irrigation. They all face a marginal cost of $10 per well. The average productivity (in $ of crop output) of the wells of the common aquifer is given by AP = 100 – W where W is the number of wells drilled into the aquifer.
1a. Assume farmers act on their own how many wells will be drilled and how much rent will the aquifer generate.
A. 45; 2025
B. 90; 2025
C. 60; 1000
D. 90; 0
E. 45; 0
F. None of the above
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