You're The Economist Gators Snapping Up Profits Applicable Concepts: short-run and long-run competitive equilibrium Farms in gators in accelerat Seve ticle in tinued t late 19 The gators spawned several In the late 1980s, many farmers who were tired hot industries. The lizard "look" of milking cows, roping came back into vogue, and the boomi steers, and slopping hogs fashionable sported gator-skin decided to try their hands at a being mine. purses, shoes, and belts. Chic new animal. Anyone feeding this didn't come cheap. In New York, animal, however, could require a for protection. Prior to the late 1970s, for $4,000. And you could order alligators were on the endangered gator meat at trendy restaurants species list. Under this protection, all along the East Coast. "Why tourist attractions. In 1985 Ele. their numbers grew so large that not gator?" asked Red Lobster ida farmers raised 37.000 gater wandering alligators became pests spokesman Dick Monroe. "To- in Florida neighborhoods and po- day's two-income households are lice were exhausted from chasing looking for more variety. And they well. Frank Godwin, owner of Ga- them around. Consequently, the think it's neat to eat an animal torland in Orlando, netted an es- ban on hunting was removed, and that can eat them." shrewd entrepreneurs began seek- ing big profits by turning gators doubled the number of its li- Improved technology was applied into farm animals. In fact, gator censed alligator farms compared farming became one of Florida's to the previous four when fastest-growing businesses. dustry gator cowboy boots sold for $1,800, and attaché cases retailed porar In gun view evide "Ar tach in 1986, that figure increased by 50 percent. Revenues soared as WO Bill and sin timated $270,000 from the 1,000 To meet the demand, Florida animals he harvested annually. mi Fi pe fo to gator farming in order to boost profits even higher. Lawler Wells, for example, owner of Hilltop years they functioned almost entirely as ©Image copyright David Huntley, 2009. Used under license trom Shutterstock.com E డడి Farms in Avon Park, raised 7,000 neither hunter nor landowner gets gators in darkened hothouses that accelerated their growth.' Seven years later, a 1993 ar- ticle in the Washington Post con- tinued the gator tale: "During the raising gators in 1995 south of At- late 1980s, gator ranching was booming, and the industry was being compared to a living gold I hope that's about to change."4 mine. People rushed into the in- dustry. Some farmers became tem- rich."3 ANALYZE THE IssUE A 2000 article in The Dallas 1. Draw short-run firm and industry competitive equilibriums for a perfectly competitive gator-farming industry before the number of alligator farms in Florida doubled. For simplicity, Morning News provided further evidence: Mark Glass, who began lanta, stated "I can honestly say I haven't made any money yet, but And a 2003 article from Knight assume the gator farm is earning zero economic profit. Now show the short-run effect of an Ridder/Tribune Business News porarily rich."2 In 1995, a USA Today inter- view with a gator hunter provided harvesting has flattened in recent evidence of long-run equilibrium: years, despite Florida's efforts to "Armed with a pistol barrel at- tached to the end of an 8-foot viable 'aquaculture' industry. It's a wooden pole, alligator hunter tough business."5 And in 2007, in Bill Chaplin fires his 'bankstick' response to numerous complaints and dispatches a six-footer with a single round of .44 magnum am- munition. What's in it for him? Commission considered eliminat- Financially, very little. At $3.50 a ing some rules that have protected pound for the meat and $45 a foot this species for years. for the hide, an alligator is worth perhaps $100 a foot. After pay- ing for skinning and processing, gave a pessimistic report for Florida: "Revenue from alligator increase in demand for alligators. 2. Assuming gator farming is perfectly competitive, explain the long-run competitive equilibrium condition for the typical promote the alligator as part of a r- of nuisance alligators, the Florida Fish and Wildlife Conservation gator farmer and the industry as a whole. or 8 1986 68 O Image copyright David Huntley, 2009. Used under license from Shutterstock.com

You're The Economist Gators Snapping Up Profits Applicable Concepts: short-run and long-run competitive equilibrium Farms in gators in accelerat Seve ticle in tinued t late 19 The gators spawned several In the late 1980s, many farmers who were tired hot industries. The lizard "look" of milking cows, roping came back into vogue, and the boomi steers, and slopping hogs fashionable sported gator-skin decided to try their hands at a being mine. purses, shoes, and belts. Chic new animal. Anyone feeding this didn't come cheap. In New York, animal, however, could require a for protection. Prior to the late 1970s, for $4,000. And you could order alligators were on the endangered gator meat at trendy restaurants species list. Under this protection, all along the East Coast. "Why tourist attractions. In 1985 Ele. their numbers grew so large that not gator?" asked Red Lobster ida farmers raised 37.000 gater wandering alligators became pests spokesman Dick Monroe. "To- in Florida neighborhoods and po- day's two-income households are lice were exhausted from chasing looking for more variety. And they well. Frank Godwin, owner of Ga- them around. Consequently, the think it's neat to eat an animal torland in Orlando, netted an es- ban on hunting was removed, and that can eat them." shrewd entrepreneurs began seek- ing big profits by turning gators doubled the number of its li- Improved technology was applied into farm animals. In fact, gator censed alligator farms compared farming became one of Florida's to the previous four when fastest-growing businesses. dustry gator cowboy boots sold for $1,800, and attaché cases retailed porar In gun view evide "Ar tach in 1986, that figure increased by 50 percent. Revenues soared as WO Bill and sin timated $270,000 from the 1,000 To meet the demand, Florida animals he harvested annually. mi Fi pe fo to gator farming in order to boost profits even higher. Lawler Wells, for example, owner of Hilltop years they functioned almost entirely as ©Image copyright David Huntley, 2009. Used under license trom Shutterstock.com E డడి Farms in Avon Park, raised 7,000 neither hunter nor landowner gets gators in darkened hothouses that accelerated their growth.' Seven years later, a 1993 ar- ticle in the Washington Post con- tinued the gator tale: "During the raising gators in 1995 south of At- late 1980s, gator ranching was booming, and the industry was being compared to a living gold I hope that's about to change."4 mine. People rushed into the in- dustry. Some farmers became tem- rich."3 ANALYZE THE IssUE A 2000 article in The Dallas 1. Draw short-run firm and industry competitive equilibriums for a perfectly competitive gator-farming industry before the number of alligator farms in Florida doubled. For simplicity, Morning News provided further evidence: Mark Glass, who began lanta, stated "I can honestly say I haven't made any money yet, but And a 2003 article from Knight assume the gator farm is earning zero economic profit. Now show the short-run effect of an Ridder/Tribune Business News porarily rich."2 In 1995, a USA Today inter- view with a gator hunter provided harvesting has flattened in recent evidence of long-run equilibrium: years, despite Florida's efforts to "Armed with a pistol barrel at- tached to the end of an 8-foot viable 'aquaculture' industry. It's a wooden pole, alligator hunter tough business."5 And in 2007, in Bill Chaplin fires his 'bankstick' response to numerous complaints and dispatches a six-footer with a single round of .44 magnum am- munition. What's in it for him? Commission considered eliminat- Financially, very little. At $3.50 a ing some rules that have protected pound for the meat and $45 a foot this species for years. for the hide, an alligator is worth perhaps $100 a foot. After pay- ing for skinning and processing, gave a pessimistic report for Florida: "Revenue from alligator increase in demand for alligators. 2. Assuming gator farming is perfectly competitive, explain the long-run competitive equilibrium condition for the typical promote the alligator as part of a r- of nuisance alligators, the Florida Fish and Wildlife Conservation gator farmer and the industry as a whole. or 8 1986 68 O Image copyright David Huntley, 2009. Used under license from Shutterstock.com

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter10: Price-searcher Markets With Low Entry Barriers

Section: Chapter Questions

Problem 15CQ

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