JNU SSS 2012 Question 89: Market failure, externalities and public goods
In a village, there is a field. If n cows simultaneously graze on this field, the value of milk produced by each cow is v(n) :
v(1)
v(2)
v(3)
v(4)
v(5)
v(6)
v(7)
22
18
15
12
10
9
8
Assume that the market price of a cow is Rs 11.
Define the aggregate income of the village as follows :
Total value of milk produced by cows grazed on the field – Total cost of buying the cows.
How many cows must graze the field for the village's aggregate income to be maximized?
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In a village, there is a field. If n cows simultaneously graze on this field, the value of milk produced by each cow is v(n): | v(1) | v(2) | v(3) | v(4) | v(5) | v(6) | v(7) | 22 | 18 | 15 | 12 | 10 | 9 | 8 | Assume that the market price of a cow is Rs 11. Define the aggregate income of the village as follows: Total value of milk produced by cows grazed on the field – Total cost of buying the cows. How many cows must graze the field for the village's aggregate income to be maximized? (A) 1 (B) 2 (C) 3 (D) None of the above
Market failure, externalities and public goods has come up 114 times in 7 exams since 2006.
What this question tests
This question is on Common-pool resources and the tragedy of the commons, part of Market failure, externalities and public goods in Microeconomics.
Overuse of resources that anyone can access, and the policies that limit it.
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