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E202ProblemSet8.3 - bidder Assuming villagers can both...

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a. If each villager decides individually how to invest, how many llamas will be sent onto the commons, and what will be the resulting total village income (from llamas and from bonds)? b. What is the socially optimal number of llamas for this village? Why is that different from the actual number? What would be total village income be if the socially optimal number of llamas were sent to the commons? c. The village committee votes to auction the right to graze llamas on the commons to the highest
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Unformatted text preview: bidder. Assuming villagers can both borrow and lend at 15 percent annual interest, how much will the right sell for at auction? How will the new owner use the right (how many llamas will graze on the commons), and what will be the resulting total village income? On my honor, as an Aggie, I have neither given nor received unauthorized aid on this assignment. Signature _____________________...
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