Please answer a) b) c):

3. Tragedy of the Commons and Free Riding: 30 points In Hollywoo, there are only two goat farmers: Bojack Horseman and Todd Chavez. Both Bojack and Todd graze their goats on the same green pasture in Hollywoo. This pasture is very large so it can accommodate many goats. However, as the number of goats grazing on the pasture increases, the amount of grass available for each goat decreases, i.e., the marginal value of goats is decreasing. More specically, if there is a total of G goats grazing on the pasture, then the value per goat is U(G) 2 hi G. The marginal cost of caring for the goat is constant c = 3.5. Let g and g denote the number of goats that Bojack and Todd choose to raise, respectively. (Please provide answers accurate to the second decimal point.) a. How many goats does Bojack and Todd each graze? Underline your answer. Hint: Bojack and Todd face symmetric problems, and Bojack would choose g to maxi- mize the following: gBv (gb +g]) - cgB. (5 points) b. What is the socially optimal number of goats grazing on the pasture? (5 points) c. Explain in one sentence why Bojack and Todd are over-grazing the pasture. (5 points)