Question #15559

Rancher Profit Function: Π(X) = 100X – X² for 0 ≤ X ≤ 100

Farmer Utility Function: U(W,X) = (W)(100 – X) for 0 ≤ X ≤ 100

What is the efficient number of cattle to run?

Suppose the rancher gets to choose how many cattle to run, but the government charges him a

tax T on each cow. At what tax rate T* will the rancher choose to run the efficient number of

cattle?

Farmer Utility Function: U(W,X) = (W)(100 – X) for 0 ≤ X ≤ 100

What is the efficient number of cattle to run?

Suppose the rancher gets to choose how many cattle to run, but the government charges him a

tax T on each cow. At what tax rate T* will the rancher choose to run the efficient number of

cattle?

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