A Cattle Rancher and a Wheat Farmer Own Adjacent Properties

question 67

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 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. $\begin{array}{lll}&\text { Fence }&\text {no Fence }\\\text { Cattle Rancher } & \$ 40,000 & \$ 35,000 \\\text { Wheat Farmer } & \$ 50,000 & \$ 20,000\end{array}$ 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 will be indifferent toward neither building the fence nor compensating the farmer for damages.

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