-The above figure shows the marginal private cost curve,marginal social cost curve,and marginal social benefit curve for raising goats on a common pasture.If property rights to the pasture are granted to a farmer so that the farmer owns the pasture,the farmer raises ________.
A) 0 goats
B) 40 goats
C) 50 goats
D) 55 goats
E) None of the above answers is correct.

Question

-The above figure shows the marginal private cost curve,marginal social cost curve,and marginal social benefit curve for raising goats on a common pasture.If property rights to the pasture are granted to a farmer so that the farmer owns the pasture,the farmer raises ________.
A) 0 goats 
B) 40 goats 
C) 50 goats 
D) 55 goats 
E) None of the above answers is correct.

Quizplus · Accepted Answer

When property rights to the pasture are granted to a farmer, the farmer will aim to maximize their private benefit, which aligns with where the marginal private cost (MPC) equals the marginal social benefit (MSB). This typically results in a reduction of negative externalities (such as overgrazing) because the farmer internalizes the costs of their actions. Without seeing the specific figure, the general principle is that the optimal number of goats would be at the intersection of the MPC and MSB curves. Assuming this intersection occurs at 40 goats based on the given options, that would be the correct answer.

-The Above Figure Shows the Marginal Private Cost Curve,marginal Social