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Common Resource Problem Suppose 2 landowners share water from a common underground aquifer. They can choose to take 0, 1, or 2 units of water
Common Resource Problem Suppose 2 landowners share water from a common underground aquifer. They can choose to take 0, 1, or 2 units of water each year for the next two years. In both years, the value of the 1St unit of water is $7 and the value of the second unit of water is $5. There are 4 units of water altogether. The cost of extracting water is $1 per unit. Finally, if there is an odd number of units left in the second year, assume the odd unit gets split between the 2 landowners, each getting half the value and paying half the cost. Question 9 1 pts How much water will each landowner take in the 1St year if he chooses the amount of water to maximize his consumer surplus for that year? Q 0 units 0 1 unit 2 units Question 10 1 pts How much water should each landowner take in the 1St year to maximize total surplus over the two years
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