Each resident is attracted to the job that pays more fish, so in equilibrium the
ID: 1222246 • Letter: E
Question
Each resident is attracted to the job that pays more fish, so in equilibrium the two jobs must offer equal pay.
One town’s Freedom Party thinks every individual in Wiknam should have the right to choose between fishing in the lakes and farming, without government interference.
A.) Under its policy, _____ million residents would fish in the lakes and ____ million would work on fish farms. This means a total number of ____ million fish would be produced.
The same town’s Efficiency Party thinks Wiknam should produce as many fish as it can. To achieve this goal, how many of the residents should fish in the lakes and how many should work on the farms?
C.) The greatest number of fish are produced when ____ million fishermen fish in the lakes and ____ million fishermen produce fish on the farms.
0 fish per day
Between 0 and 1 fish per day
Between 1 and 2 fish per day
Between 2 and 3 fish per day
E.) Compared with the Freedom Party’s hands-off policy, who benefits from the imposition of the Efficiency Party’s fishing tax?
Fishermen at the lakes
Fishermen at the farms
Everyone
No one
Explanation / Answer
A)Four residents would fish in the lake and one would fish on the farm. Each fisherman would catch 2 fish, so 10 fish would be produced
B)
C)The greatest number of fish is produced when two fishermen fish at the lake while the other three fish at the farm. A total of 14 fish would be caught.
D) The tax would have to be slightly larger than 1 (such as 1.01). Then only 2 fishermen would want to fish in the lake.
E). Everyone is better off because there are more fish for everyone and the tax has been provided back to the residents
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