Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Open Access Problem The US Bureau of Land Reclamation (BLM) manages grazing on public lands in the Western U.S. Suppose that for a certain
The Open Access Problem The US Bureau of Land Reclamation (BLM) manages grazing on public lands in the Western U.S. Suppose that for a certain grassland grazing generates a total value of 10,000H - 6H 2 , where H is the number of heads of cattle grazed on the land. Ranchers also have a marginal cost of M C=1000 for each head they graze. A. Calculate the net benefits from ranching under the socially optimal outcome. B. Solve for the optimal number of permits, where each permit allows a rancher to graze 10 heads of cattle. ( Hint: the government want to issue permits to the ranchers in order to achieve the socially optimal outcome ) C. Suppose we are at the open access outcome and a government under pressure from ranching lobbyists gives subsidies to each rancher in the amount of 600H, where H is number of heads. Calculate the new open access outcome under this. ( Hint: You can consider subsidy as a way to lower the total costs of ranchers ) D. Calculate the net benefit to the society under which the government gives out 600H to each rancher. ( Hint: The society will have to pay
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started