Could Questions 3 and 4 be answered? A farmer's fields are right next to the train tracks, where sparks from the trainsset the field on fire. The railroad profit from running zero, one, two or threetrains is shown below. The columns indicate the number of trains running. Totalrailroad profits are the total profits to the railroad from running the specifiednumber of trains. Total lost farmer profits are total profits the farmer loses froma specified number of trains running.2.Trains123$200$0$300$100$350$125Total Railroad Profit$410Total Lost Profit for Farmer$300What is the socially optimal number of trains?a) 0b) 1c) 2d) 3e) Not enough informationHow many trains will run if the farmer is granted a property right to be free ofsparks?4.a) 0b) 1c) 2d) 3e) Depends on transaction costs3.

Socially optimal level of consumption or production is the level at which marginal benefit from the…

3. What is the socially optimal number of trains? a) 0 b) 1 c) 2 d) 3 e) Not enough information How many trains will run if the farmer is granted a property right to be free of sparks? 4. a) 0 b) 1 c) 2 d) 3 e) Depends on transaction costs

3. What is the socially optimal number of trains? a) 0 b) 1 c) 2 d) 3 e) Not enough information How many trains will run if the farmer is granted a property right to be free of sparks? 4. a) 0 b) 1 c) 2 d) 3 e) Depends on transaction costs

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Could Questions 3 and 4 be answered?

A farmer's fields are right next to the train tracks, where sparks from the trains
set the field on fire. The railroad profit from running zero, one, two or three
trains is shown below. The columns indicate the number of trains running. Total
railroad profits are the total profits to the railroad from running the specified
number of trains. Total lost farmer profits are total profits the farmer loses from
a specified number of trains running.
2.
Trains
1
2
3
$200
$0
$300
$100
$350
$125
Total Railroad Profit
$410
Total Lost Profit for Farmer
$300
What is the socially optimal number of trains?
a) 0
b) 1
c) 2
d) 3
e) Not enough information
How many trains will run if the farmer is granted a property right to be free of
sparks?
4.
a) 0
b) 1
c) 2
d) 3
e) Depends on transaction costs
3.

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