1. Explain in words why a common-pool fishery will have "too many" fishermen. 

2. Traffic congestion is a growing problem around the world. A town is trying to understand what to do about the congestion problem and has figured out that driving trips around town have the following costs and benefits: 

Total Benefit of Driving = 20,004 trips - 2 trips²

Marginal Benefit = 20,004 - 4

a. trips Marginal Cost = Average Cost = 4 %3! a. Assume that the total benefit of driving is divided evenly across the trips driven. If a driver is considering taking an additional trip, how much benefit will she get from trip.

b. Given the average benefit function from part (a), solve for the total number of trips that this town would expect in a year. What will the total benefit of driving be? What will total costs be? What will "profits" be (where profits here are just total benefits minus total costs)? 

c. Find the optimal number of trips that would occur in an efficiently managed town. What would the total benefit of driving be in this case? What would total costs be? What would "profits" be? 

d. What is this problem called? What is one way that this problem is addressed in fisheries? Would that approach work for driving? Explain.

Answer rating: 100% (QA)

Q1 The question is an example fo what is known as the tragedy of the commons It is a problem as ever... View the full answer