In a fishery the long-run harvest function (harvest volume) is H(E) = aE – bE², with a, b representing positive constants and E is fishing effort. Total cost is TC(E) = cE, with c being the unit cost of effort. %3D Total revenue is TR(E) = pH(E), with p being the constant price of fish. %3D a) Find the open-access equilibrium values of effort and harvest. b) Find the fishing effort that maximizes resource rent, EMEY, and the corresponding harvest, HMEY- c) Find the fishing effort that maximizes sustainable yield (harvest), EMSY-

In a fishery the long-run harvest function (harvest volume) is H(E) = aE – bE², with a, b representing positive constants and E is fishing effort. Total cost is TC(E) = cE, with c being the unit cost of effort. %3D Total revenue is TR(E) = pH(E), with p being the constant price of fish. %3D a) Find the open-access equilibrium values of effort and harvest. b) Find the fishing effort that maximizes resource rent, EMEY, and the corresponding harvest, HMEY- c) Find the fishing effort that maximizes sustainable yield (harvest), EMSY-

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter10: Strategy: The Quest To Keep Profit From Eroding

Section: Chapter Questions

Problem 10MC

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Suppose there are 100 farmers each with 10 acres that overlie a common groundwater aquifer. They all have identical farmland that is more productive if wells are used to pump the groundwater for irrigation. They all face a marginal cost of $10 per well. The average productivity (in $ of crop output) of the wells of the common aquifer is given by AP = 100 – W where W is the number of wells drilled into the aquifer. 1a. Assume farmers act on their own how many wells will be drilled and how much rent will the aquifer generate. A. 45; 2025 B. 90; 2025 C. 60; 1000 D. 90; 0 E. 45; 0 F. None of the above
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In a fishery the long-run harvest function (harvest volume) is H(E) = aE - bE2, with a, b representing positive constants and E is fishing effort. Total cost is TC(E) = CE, with e being the unit cost of effort. Total revenue is TR(E) = pH(E), with p being the constant price of fish.a) Find the open-access equilibrium values of effort and harvest.b) Find the fishing effort that maximizes resource rent, EvEy, and the corresponding harvest, HMEY.c) Find the fishing effort that maximizes sustainable yield (harvest), EMsy. d) Explain why higher levels of effort (E) beyond a certain point are associated withreductions in long-run total revenue (TR).Explain why it generally is not efficiency- maximizing for society to supply the level of fishing effort that maximizes the sustainable yield.
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In a fishery the long-run harvest function (harvest volume) isH(E) = aE - bE2, with a, b representing positive constants and E is fishing effort.Total cost is TC(E) = CE, with e being the unit cost of effort.Total revenue is TR(E) = pH(E), with p being the constant price of fish.a) Find the open-access equilibrium values of effort and harvest. b) Find the fishing effort that maximizes resource rent, EvEy, and the corresponding harvest,HMEY. c) Find the fishing effort that maximizes sustainable yield (harvest), EMsy. Answer only sub parts b and c.
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can you please solve part c and d of this practice problem
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Appalachian Coal Mining believes that it can increase labor productivity and, therefore, net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC = 40P where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction, the marginal increase in revenue (MR) is MR = 1,000 - 10P How much pollution reduction should Appalachian Coal Mining undertake?