5. Imagine that a rancher who raises jackalopes and a farmer who grows crops operate right next to each other. The problem is that the jackalopes do some damage to the farmers crops, as described in the table below.

Imagine that the price of jackalopes is $525.

A. How many jackalopes will the rancher want to raise?

B. What is the socially optimal or efficient number of jackalopes for the rancher to raise?

C. Assume that rancher has the right to raise as many jackalopes as she wants and bears no liability for damage done to the farmers crops. How can Coasian bargaining lead to the socially optimal outcome? What is the possible range of values of the payments?

# of Jackalopes Marginal private cost Marginal crop damage 1 $100 $25 2 $200 $50 3 $300 $75 4. $400 $100 5 $500 $125 6 $600 $150 # of Jackalopes Marginal private cost Marginal crop damage 1 $100 $25 2 $200 $50 3 $300 $75 4. $400 $100 5 $500 $125 6 $600 $150