Externalities 5. (Tragedy of the Commons) Consider a bay where z boats operate in lobster trapping....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Externalities 5. (Tragedy of the Commons) Consider a bay where z boats operate in lobster trapping. Assume that it costs $2000 a month to operate a boat. Suppose further that the total size of the lobster catch (measured in thousands) is f(x) = 10r-r². The price of a lobster is $1. (a) Draw the average and marginal product curves for the number of boats, AP(x) = f(x)/x and MP(x) = df (x)/dx, on the same graph. (b) If there are no restrictions on the number of boats that can operate, how many boats will trap lobsters in the bay. (Hint: Use the zero profit condition.) (e) Now suppose the local village has authority to issue permits which trappers must have to operate in the bay. If the village wants to maximize the size of the lobster catch, how many permits should be issued each month? What it the village wants to maximize welfare? (d) If the village authorities sell monthly permits, at what permit price will the optimal number of permits be purchased by trappers? Externalities 5. (Tragedy of the Commons) Consider a bay where z boats operate in lobster trapping. Assume that it costs $2000 a month to operate a boat. Suppose further that the total size of the lobster catch (measured in thousands) is f(x) = 10r-r². The price of a lobster is $1. (a) Draw the average and marginal product curves for the number of boats, AP(x) = f(x)/x and MP(x) = df (x)/dx, on the same graph. (b) If there are no restrictions on the number of boats that can operate, how many boats will trap lobsters in the bay. (Hint: Use the zero profit condition.) (e) Now suppose the local village has authority to issue permits which trappers must have to operate in the bay. If the village wants to maximize the size of the lobster catch, how many permits should be issued each month? What it the village wants to maximize welfare? (d) If the village authorities sell monthly permits, at what permit price will the optimal number of permits be purchased by trappers?
Expert Answer:
Related Book For
Posted Date:
Students also viewed these economics questions
-
Write an alternative definition that is tail-recursive (iterative) and makes use of accumulator variables. [10 marks] Explain why your alternative definition executes more efficiently. [3 marks] 1...
-
In representative democracies where legislators represent geographic districts in legislative bodies (such as the U.S. House of Representatives), we often hear of pork barrel spending. Typically,...
-
Which statement about the Java variable and literal is NOT true? a. A global variablewill be initalised by the complier automatically. b. Literals can also be used as the lvalue in an express. c. An...
-
The Clean Air Act provides a basis for regulating air pollution from what two kinds of sources?
-
The BOMs for products A and B are shown in Figure. Data from inventory records are shown in table. The MPS calls for 85 units of product A to be started in week 3 and 100 units in week 6. The MPS for...
-
A call option pays an amount \(V(S)=\frac{1}{1+\exp (S(T) K)}\) at time \(T\) for some predetermined price \(K\). Discuss what you would use for a control variate and generate a simulation to...
-
Income statements for Thompson Company for 2011 and 2012 follow. Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between 2011 and 2012. b....
-
Due to erratic sales of its sole producta high-capacity battery for laptop computers-PEM, Incorporated, has been experiencing financial difficulty for some time. The company's contribution format...
-
X Company expects to produce and sell 50,000 units of its only product next year, and revenue is expected to be $1,720,500. The following are budgeted costs for next year: Direct materials 230,500...
-
CareMed stock has a beta of 1.5. With virtually no inflation, the risk-free rate of return is 3.5% and the market risk premium is 6%. Care Med stock is a constant growth stock with a dividend growth...
-
Both Mary and Peter are 32 years old. They will get married soon, but they have no plans to have children at the moment. They both live with their parents now. Their parents are retired and are in...
-
Write a C++ program (main function) which will allow a user to enter values for two arbitrary sized arrays v and w, then compute their dot product. The dot product calculation itself should be...
-
Requirements for this case analysis: Problem statement Discussion of first, second, third key issues Recommendation - executive summary First alternative with pros and cons, second alternative with...
-
1. How will the communication capabilities of the Internet impact the ability of business customers to receive feedback from customers? 2. Explain what promotion can do and what it cannot do. 3. How...
-
Wind Beneath My Wings Inc. employs one person to run its wind energy company and July is the first pay period for this employee. The employees gross income for the month of July is $6,900. FUTA taxes...
-
(a) What is the focal length of a magnifying glass that gives an angular magnification of 8.0 when the image is at infinity? (b) How far must the object be from the lens?
-
A monopoly faces an inverse demand curve, p(y) = 100 2y, and has constant marginal costs of 20. (a) What is its profit-maximizing level of output? ________. (b) What is its profit-maximizing price?...
-
On August 29, 2005, Hurricane Katrina caused severe damage to oil installations in the Gulf of Mexico. Although this damage could eventually be repaired, it resulted in a substantial reduction in the...
-
Ashley is thinking of buying a truckload of wine for investment purposes. He can borrow and lend as much as he likes at an annual interest rate of 10%. He is looking at three kinds of wine. To keep...
-
Cress Trust owns houses in Marion County, for whom Rainbow Realty Group, Inc., sells, rents, and manages. The same person serves as Rainbows president and Cresss corporate trustee. Cress offers four...
-
Genevieve and William Timmons began their tenancy of a ground-floor apartment at Cobblestone Square in September 2011. Kingsley-Johnston, Inc., is a property management company responsible for...
-
Linda Miller rented 35 acres of pastureland in Wabaunsee County, Kansas, from William Burnett for $1,000 per year. Miller and her husband used the land to grow and harvest brome grass for their...
Study smarter with the SolutionInn App