A lake supports a variety of fish. The land around the lake is owned by two fisherman, so by state law both are free to fish as much as they like. Let FA and FB be the number of fish each catches, respectively. Suppose the price of fish is 100 - FA - FB. Given this demand curve, it turns out that marginal revenue is 100 - 2FA - FB for fisherman A and 100 - FA - 2FB for fisherman B.

Question: What would happen if marginal costs for Fisherman A went up but stayed the same for Fisherman B, and what is the potential risk associated with both fishermen having access to the common resource of fish?

Answer rating: 100% (QA)

Impact of Increased Marginal Cost for Fisherman A If Fisherman As marginal cost increases it will af... View the full answer