chapter 9 question 6 and 136. what are the highest and lowest payments from the writer that the...

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chapter 9 question 6 and 136. what are the highest and lowest payments from the writer that the bookeeper farmer team will accept for the sixth day? Assuming that the farmer can dispose of $7 from the writer as she wishes, what range of payments will the bookeeper accept? Assuming that the bookeeper gets that amount, what range of payments will the farmer accept?13 some fields have large enough quantities of both oil and natural gas that coordination must be achieved for the production of both, rather than oil alone. Will fields with both oil and gas have greater difficulties in unitization than fields with oil or gas alone.chapter 10 question 2 and 112. why might a parent company like mc donalds or hilton choose to franchise its local outlets rather than own them and staff them with employees? in many smaller cities all mcdonalds outlets are owned by the same franchise. why is this fact consistent with our discussion of specfic investments.11. every so often a disgruntled collge graduate sues her school on grounds that her tutition payments did not land her the good job she was expecting when she started there. courts invariably throw out cases like hers. they are however willing to entertain suits aganist trade schools by graduates who make the same claims about inabilty to qualify for jobs that use the skills they learned in them. why the difference?

David · Accepted Answer

Solution to Question 1 
The problem can be solved using the Coarsian theory of externality. In his approach, Coarse says 
that the creator of externality and the vicitims will negotiate costlessly to arrive at an agreement 
related to the production of the externality. In this question, bees are a source of externality for 
the writer as they cause disturbance in his work. Thus he would offer the  farmer and the 
beekeeper to restrict the production of bees. 
 The marginal benefit to the writer, if the six bee is not produced is $11 as given in the table. 
Thus this is the maximum amount he will be willing to offer to the farmer and the beekeeper. 
To find the minimum amount which the writer should offer to the farmer and the beekeeper is 
given by the total marginal profits they can make by producing the sixth bee. 
Marginal profit to the beekeeper+ Marginal profit to the farmer = -$3+$5 = $2 
thus the minimum offer should be $2. 
It is given in the question that the farmer and the beekeeper can extract a maximum of $7 from 
the the writer. Since the beekeeper is making a loss of $7 by producing the 6th bee, he will be 
willing to accept any offer of $7 or below. Similar exercise can be done for the 5th bee as well. 
The marginal benefit to the writer if he can prevent the production of the 5th bee is $9. The total 
marginal benefit to the beekeeper and the farmer is given by -$1+$6 = $5. Thus this is the 
minimum amount that they will expect the writer to offer them. The writer, if offers them the 
maximum payment of $7, will still be better off with a surplus of $2. If the writer will try to go 
beyond this and prevent the production of the 4th bee, this would not be optimal. The marginal 
benefit to the writer if he can prevent the production of the 4th bee is $7 whereas the total 
marginal benefit to the farmer and the beekeeper will be $8. So they will not be willing to accept 
the offer of $7.

chapter 9 question 6 and 13 6. what are the highest and lowest payments from the writer that the bookeeper farmer team will accept for the sixth day? Assuming that the farmer can dispose of $7 from...

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