Questions You and four other farmers lease land from the govern- ment to graze your cattle....
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Questions You and four other farmers lease land from the govern- ment to graze your cattle. The land can support 100 healthy cows, where a healthy cow weighs 500 lbs. (For the sake of simplicity, assume that a cow cannot exceed 500 lbs, and that the entire 500 lbs.is meat available for mark et). For every cow (above 100) added to the field, each suffers a 10-1b.reduction in weight. Further, assume a cow cannot survive (or is not marketable) below 300 lbs. The government believes in a self-policing policy -you and your fellow farmers must manage your herds on your own. Then answer the questions on the next page. 1. Graph the weight of each cow as a function of the number of cows in the field (use graph paper). 4. As a profit-maximizing farmer, do you add cattle? What do the other profit-maximizing farmers do? 5. Now, assume that the other farmers come to you with a plan to share the payoff or profits of a common herd (assuming all five farmers). Show,on a spreadsheet, the results of your decision to add or not add one cow vs. every one of the other farmers' 2 How many cows will cause the commons to collapse (i.e., at what point does the field fail to support any cattle)? 3. Each farmer (you and the four others) has 20 head of cattle. Develop a spreadsheet that shows the "payoff" or 'profit" (your payoff = the number of pounds of cattle) that results from your decision to add or not add one cow vs.every one of the other farmers' decision to add or not add one cow each decisions to add or not add one cow. 6. What stands in the way of implementing the plan in Question 5? 7. What other agricultural and industrial systems might be prone to the "Tragedy of the Commons" problem? (the payoff should be in total pounds for each farmer's herd). As an example, the payoff for no one adding more cattle would appear as follows: You add: Others add: Your payoff: Others' payoff: Activate Win Go to Settings to 10,000 0,0 Repeat for two and three cows. Questions You and four other farmers lease land from the govern- ment to graze your cattle. The land can support 100 healthy cows, where a healthy cow weighs 500 lbs. (For the sake of simplicity, assume that a cow cannot exceed 500 lbs, and that the entire 500 lbs.is meat available for mark et). For every cow (above 100) added to the field, each suffers a 10-1b.reduction in weight. Further, assume a cow cannot survive (or is not marketable) below 300 lbs. The government believes in a self-policing policy -you and your fellow farmers must manage your herds on your own. Then answer the questions on the next page. 1. Graph the weight of each cow as a function of the number of cows in the field (use graph paper). 4. As a profit-maximizing farmer, do you add cattle? What do the other profit-maximizing farmers do? 5. Now, assume that the other farmers come to you with a plan to share the payoff or profits of a common herd (assuming all five farmers). Show,on a spreadsheet, the results of your decision to add or not add one cow vs. every one of the other farmers' 2 How many cows will cause the commons to collapse (i.e., at what point does the field fail to support any cattle)? 3. Each farmer (you and the four others) has 20 head of cattle. Develop a spreadsheet that shows the "payoff" or 'profit" (your payoff = the number of pounds of cattle) that results from your decision to add or not add one cow vs.every one of the other farmers' decision to add or not add one cow each decisions to add or not add one cow. 6. What stands in the way of implementing the plan in Question 5? 7. What other agricultural and industrial systems might be prone to the "Tragedy of the Commons" problem? (the payoff should be in total pounds for each farmer's herd). As an example, the payoff for no one adding more cattle would appear as follows: You add: Others add: Your payoff: Others' payoff: Activate Win Go to Settings to 10,000 0,0 Repeat for two and three cows.
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2 The Commons collapses with 120 cows 3 Using theses formulae where yyou and xothers your payoff 20 ... View the full answer
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Fundamentals of Corporate Finance
ISBN: 978-0078034640
7th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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