[Solved] Assignment 219474

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Subject: Economics    / General Economics
QuestionQuestion 2 – [24 marks]Consider two dairy farms B and C. They send their cows to the commons. If farm B sends bcows and farm C sends c cows to the commons, the milk production (in kiloliters, kl) per cowis:f(b,c) = 300 ? (b+ c)This is the same for all cows of both farms. The cost of milk production is:f(b, c) = 90 × zIf a farm keeps zcows, and this the same for both farms. The market price of milk per klis 1.a. Show that the commons will be over-exploited. [20 marks]b. Suggest two solutions that the village chief can use to overcome the over exploitation ofthe commons by the two farms. [4 marks]

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