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:

Short-Term Memory

The component of memory that temporarily holds a limited amount of information before it is either forgotten or transferred to long-term memory.

Organizing Information

The process of arranging or structuring information in a systematic way for easy access, understanding, or retrieval.

Meaningful Units

Components of information or data that have been organized and interpreted to have significance and purpose.

Chunking

A memory strategy that involves breaking down information into manageable units or chunks to enhance recall.