Question

4. Members of a fishing village in New England have open access to a fishery (no one in the village explicitly owns the fishery). As long as an individual is a resident of the village, the individual can harvest as much fish as he wants from the fishery. All non‐residents are not allowed to fish. Given this scenario, is the equilibrium level of fishery harvest “too much” or “too little” or equal to the social optimum? Explain why this occurs. Support your answer by drawing the private and social, marginal cost and marginal benefit curves for fish. Identify the deadweight loss area if any exists. please draw the graph

Answer 1