What will be the outcome if Roy is liable for damages Will Fern farm Rancher Roy has his ranch next to the farm of farmer Fern

Marketing Dec 27, 2020

What will be the outcome if Roy is liable for damages Will Fern farm Rancher Roy has his ranch next to the farm of farmer Fern. Cattle tend to roam and sometimes they stray onto Fem's land and damage her crops. Roy can choose the size of his herd. His revenues are $6 for each cow he raises. The schedules of his marginal cost of production MCP and the damage each additional cow creates marginal cow damage or MCD are given below.

Farmer Fern can choose either to farm or not to farm. Her cost of production is $10, and her revenue is $12 when there are no cattle roaming loose. For each additional cow her revenue is reduced by the amount in the MCD column below.

#cattle	MCP $	MCD $	MR $
1	3	1	6
2	4	2	6
3	5	3	6
4	6	4	6
5	7	5	6
6	8	6	6

If Roy does not have to pay for any damage caused, What's the optimal number of cows to raise?

Expert Solution

please see the attached file.

Download Solution Attachment (PDF/Doc)

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote