Show that the commons will be over-exploited

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Consider two dairy farms B and C. They send their cows to the commons. If farm B sends b cows and farm C sends c cows to the commons, the milk production (in kiloliters, kl) per cow is:

(b,c) = 300 - (c)

This is the same for all cows of both farms. The cost of milk production is:

(bc) = 90 × z

If a farm keeps cows, and this the same for both farms. The market price of milk per kl is 1.

a. Show that the commons will be over-exploited.

b. Suggest two solutions that the village chief can use to overcome the over exploitation of the commons by the two farms.

Reference no: EM131438193

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