Question 1( A mountain village owns a common pasture where villagers can each graze a goat. The cost to a goat owner of owning and caring for a goat is £3. The total revenue from all goats on the common pasture is fig)-(51g-3g), where g is the number of goats on the pasture. All goats are identical, so revenue is divided equally per goat- owner. The town council notices that total profit from the pasture is not maximised if villagers are allowed to pasture goats for free. The council decides to allow a goat to use the common pasture only if its owner buys it a goat license. To maximise total profit (of villagers and council), how many £ per goat should the council charge? 26 20 22 24 28

Question 1( A mountain village owns a common pasture where villagers can each graze a goat. The cost to a goat owner of owning and caring for a goat is £3. The total revenue from all goats on the common pasture is fig)-(51g-3g), where g is the number of goats on the pasture. All goats are identical, so revenue is divided equally per goat- owner. The town council notices that total profit from the pasture is not maximised if villagers are allowed to pasture goats for free. The council decides to allow a goat to use the common pasture only if its owner buys it a goat license. To maximise total profit (of villagers and council), how many £ per goat should the council charge? 26 20 22 24 28

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 6MC

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