A Cattle Rancher and a Wheat Farmer Own Adjacent Properties

question 115

Multiple Choice

A cattle rancher and a wheat farmer own adjacent properties that may or may not be separated by a fence.The accompanying table identifies the annual profit received by each party per year in the event there is,or there is not,a fence.If there is no fence,one can be installed and maintained at an annual cost of $25,000.


If legal rights are assigned to the wheat farmer so that the cattle rancher is liable for any damage caused by his cattle to the wheat crop,then the

• A) rancher will choose to close his ranch.
• B) farmer will not allow the rancher to stay in business.
• C) rancher will pay to build the fence.
• D) rancher will choose to compensate the farmer for damages.
• E) rancher is indifferent toward building the fence or compensating the farmer for damages.

---

Definitions:

Misallocation

Inefficient distribution or use of resources, often resulting in reduced economic efficiency or productivity.

Improved Quality

Enhancements or upgrades to the standards of products, services, or processes to exceed previous benchmarks.

Partnership

A formal business arrangement involving two or more persons who equally share in the management and financial gains.

Real Wage

Real wage refers to the purchasing power of wages, taking into account the effects of inflation or deflation. It represents how much goods and services wages can actually buy.