題組內容

二. Problems and Short-essay Questions
Please answer the following questions IN SEQUENCE. All questions may be answered in either Chinese or English.
1. Suppose there is a railway that runs coal-burning steam locomotives through a farming area and caused fires in the crop felds at harvest time. The crop damage from each train run is $200. To run trains, the railway company incurs a private marginal cost of $100n, where n denotes the number of train runs. For simplicity, assume there are no fixed costs. The revenue from a train run is $400.

(C) (6 points) How many trains would the railway company run if no compensation is required for crop damage but the negotiations between the company and the farmers are free of any transaction costs? How much proft does the company make?