Question

11.Consider an ocean fishery. Suppose the total benefit (TB) is equal to 100B – 10B² (in 1,000 dollars), and the total cost (TC) is equal to 10B, where B is hundreds of boats in the fishery (B=1 is 100 boats).

What's the open-access outcome?

12. For question 11, what is the net benefit from this fishery under the unregulated, open-access outcome?

13.For question 11, consider the same fishery. The marginal revenue from fishing is 100 – 20B, and the marginal cost is 10, where B is hundreds of boats in the fishery (B=1 is 100 boats). What will be the socially optimal number of boat that enters the fishery?

14.For Question 11, to correct this market failure, what should be the optimal tax rate charged per boat?

Answer 1