A Farmer Notices That a Neighboring Rancher's Cattle Are Wandering

question 285

Multiple Choice

A farmer notices that a neighboring rancher's cattle are wandering and destroying some of his crops. The farmer decides to offer a payment to the rancher if the rancher will reduce the size of his herd. By doing so, the farmer

• A) can be sure that the size of the herd will be reduced and the size of his own harvest will be increased.
• B) indicates to the rancher that there is an opportunity cost to the wandering of the cattle, and thereby internalizes the externality.
• C) inadvertently bears the costs of the externality when the rancher should be liable for the costs.
• D) informs the rancher that the cattle have destroyed crops, which should induce the farmer to build a fence in order to maintain good relations.

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Definitions:

Technical Skills

Specific abilities or competencies required to perform particular tasks or operate specific equipment or software.

First-level Manager

A manager who is directly responsible for overseeing the work of entry-level employees, typically the first layer of management in an organization.

Organizing Function

The organizing function involves arranging resources and tasks to achieve the objectives of an organization efficiently.

Supervising

The process of overseeing and directing the work and performance of others in a professional setting.