Suppose a farmer (A) faces the payoff matrix below to describe the income she wo
ID: 2495199 • Letter: S
Question
Suppose a farmer (A) faces the payoff matrix below to describe the income she would derive from her choice of pesticide use relative to the choices of other farmers. The reason for this payoff matrix is the development of pesticide resistance due to high levels of pesticide exposure. Describe the situation the illustrated by the payoff matrix and discuss how the economics of pesticide resistance parallel the economics of fisheries management.
Return on $1 investment of pesticide application
Other farmers
Low usage
High usage
Farmer A
Low usage
$10
$5
High usage
$15
$7
Return on $1 investment of pesticide application
Other farmers
Low usage
High usage
Farmer A
Low usage
$10
$5
High usage
$15
$7
Explanation / Answer
The payoff matrix illustrates the situation Where Famer A gets payoff of $10 when his pesticides usage is low and other farmers also use low pesricide and the payoff of pesticides increases to $15 when Famer A uses High pesticides while others Usage is still Low. When farmer A uses low pesticide but other uses high pesticides then the payoff of Farmer A is 5 and its payoff increases to 7 when others still use high pesticide and he also uses high pesticedes.
The economics of pesticide resistance parallel the economics of fisheries management as both represents the case of externalities where the action of one agent effects the payoff of the others. As in case of fisheries, when new fisherman joins, it effects the number of fish caught by existing fisherman. In the same way When more farmers use pesticides, it effects the resistance and hence the payoff of the farmer A and
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