Question

Salmon fishermen in the Alaska fishery have been going through hard times for the past two years since the federal government approved the sale of genetically modified salmon. Grown in large tanks far from the ocean, these modified fish have genes that make them grow twice as fast as wild salmon, creating a fish product that can sell for much less than salmon wild-caught from Alaska. Until 2018, the U.S. market supply and demand for wild-caught Alaska salmon had reached a stable equilibrium.   In the past two years since the genetically modified salmon have been on sale, sales of wild Alaska salmon have fallen dramatically. Many salmon fishermen complain that they are losing money each year. Some are reducing their fishing activities, staying in the harbor for weeks at a time. One fisherman said “After I pay for fuel and pay my crew, there’s not enough money to cover the payments on my boat. If this continues for another year or two, it will push me into bankruptcy.”  

Include supply/demand graphs of the overall market for wild salmon, plus firm-specific demand and firm-specific average cost and marginal cost curves for the individual firms (salmon fishermen) to illustrate your analysis. The goal is to rigorously explain the economics (not the science, ecology or other aspects) of the events that are discussed in the above article, carefully explaining the meaning of any graphs and/or calculations using the theory we developed in this course.

Answer 1