1 Question 41What are payoffs of the farmers in the Nash equilibrium outcome of this scenario?Both farmers earn a profit of $7.Both farmers earn a profit of $4.) The answer is uncertain because there are multiple Nash equilibria.Both farmers earn a profit of $2.Question 42,If the farmers acted cooperatively by choosing the intensity that maximizes theirjoint payoff, what would their total profit be?$12$20$14$22Question 43,Rules and regulations that limit the actions of rational individuals can never makethem better off because they would otherwise choose the best outcomes forthemselves.TrueFalse Example 2: Agricultural irrigationQuestions 41-43 relate to the following information. Suppose that groundwater isused for irrigation in a rural area. Overuse of groundwater can reduce the level of thewater table, making it more costly for all farmers to extract water. For simplicity,suppose that water can be used at two intensities --- high and low --- and that thereare only two farmers. The revenue from crop production for each farmer increaseswith the intensity of groundwater usage: it is $23 for high intensity and $15 for lowintensity. The cost of extracting the water depends on whether the other farmer'sintensity is high or low. The extraction cost for each farmer is $4 for low intensityand $11 for high intensity, if the other farmer is a low intensity user. However, itrises by $5 in each case if the other farmer is a high intensity user.

High Farmer 2 Low Farmer 2 High Farmer 1 23- 16 , 23-16 23-11, 15- 9 Low Farmer 1 15- 9 ,…

What are payoffs of the farmers in the Nash equilibrium outcome of this scenario Both farmers earn a profit of $7. Both farmers earn a profit of $4. The answer is uncertain because there are multiple Nash equilibria. ) Both farmers earn a profit of $2. Question 42, If the farmers acted cooperatively by choosing the intensity that maximizes their joint payoff, what would their total profit be? $12 O $20 O$14 $22 Question 43, Rules and regulations that limit the actions of rational individuals can never make them better off because they would otherwise choose the best outcomes for themselves. True False

What are payoffs of the farmers in the Nash equilibrium outcome of this scenario Both farmers earn a profit of $7. Both farmers earn a profit of $4. The answer is uncertain because there are multiple Nash equilibria. ) Both farmers earn a profit of $2. Question 42, If the farmers acted cooperatively by choosing the intensity that maximizes their joint payoff, what would their total profit be? $12 O $20 O$14 $22 Question 43, Rules and regulations that limit the actions of rational individuals can never make them better off because they would otherwise choose the best outcomes for themselves. True False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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