In class we discussed both how to sustainably and efficiently manage a fishery.

Question

In class we discussed both how to sustainably and efficiently manage a fishery. The questions in the following section pertain to that topic. Use the following equations and graph to help answer them. TR =-(E-10)" + 100 MR = 20-2E TC-6E MC = 6 Benefits and Costs of Fishing Effort (dollars) Total Costs Benefits Quantity of Fishing Effort (units) Ee 11. What equality will hold at the unregulated tragedy of the commons equilibrium? a.)MC-MR b.)TC-TR c.)MC-TC d.)MB-TR e.)none of the above 12. Which effort level corresponds with this tragedy of the commons equilibrium? a. 77n d.) none of them do 13.Is this level of effort sustainable for the fishery? Yes No 14. Calculate the effort level this occurs at this equilibrium (I want the number) 15. Calculate the economic surplus (scarcity rent) at this equilibrium(I want the number)

Explanation / Answer

11.

Consider the given problem, here at the “unregulated tragedy of commons equilibrium”, “TC=TR” condition should hold. So, 11(b).

12.

So, “Ec” corresponds “tragedy common” equilibrium, where “TC=TR” condition will hold.

12(c)

13.

This level of effort is not sustainable for fishing, since here “TC=TR”, but “MR < MC”.

So, “NO”.

14.

So, at the equilibrium , “TC=TR”, => -(E-10)^2+100 = 6E, => 20E-100-E^2=6E.

=> E^2-14E=0, => E=0, 14. So, since “E” can’t be “0”, => E=14.

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