Example 2: Agricultural irrigation Questions 41-43 relate to the following information. Suppose that groundwater is used for irrigation in a rural area. Overuse of groundwater can reduce the level of the water 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 there are only two farmers. The revenue from crop production for each farmer increases with the intensity of groundwater usage: it is $23 for high intensity and $15 for low intensity. The cost of extracting the water depends on whether the other farmer's intensity is high or low. The extraction cost for each farmer is $4 for low intensity and $11 for high intensity, if the other farmer is a low intensity user. However, it rises by $5 in each case if the other farmer is a high intensity user.