EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 17, Problem 5RQ
To determine
How is efficiency of catching fish is maximized.
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Melanie and Oli are competing Pacific halibut fishers. Both have been allocated ITQs that limit their catch to 1,000 tons of Pacific halibut each. Melanie's cost per ton is $20; Oli's cost per ton is $25. Assume that the market price of Pacific halibut is $35 per ton. If Melanie pays Oli $11 per ton for his ITQs and then catches her new limit of 2,000 tons, her profit would be
Multiple Choice
$39,000.
$19,000.
$25,000.
$15,000.
Melanie and Oli are competing Pacific halibut fishers. Both have been allocated ITQs that limit their catch to 1,000 tons of Pacific halibut each. Melanie's cost per ton is $20; Oli's cost per ton is $28.Refer to the information given and assume that the market price of Pacific halibut is $40 per ton. If Melanie pays Oli $10 per ton for his ITQs and then catches her new limit of 2,000 tons, their combined profit would be:
$28,000.
$32,000.
$40,000.
$54,000.
Janeek and Raj are the only two growers who provide organically grown com to a local grocery store. They know that if they cooperated and
produced less com, they could raise the price of the corn. If they work independently, they will each earn $100. If they decide to work
together and both lower their output, they can each earn $150. if one person lowers output and the other does not, the person who lowers
output will earn $0 and the other person will capture the entire market and will earn $200. Reference the game illustrated below where the
first payout in each cell is for Janeek and the second is for Raj.
(J.R)
Independent
Cooperate
Independent
($100, $100)
($0, $200)
What is the Nash Equilibrium for this game?
Ⓒ(Cooperate, Cooperate)
(Cooperate, Independent)
(Independent, Cooperate)
(Independent, Independent)
Cooperate
($200, 50)
($150, $150)
Chapter 17 Solutions
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