Consider an ocean fishery. Suppose the total benefit (TB) is equal to 100B – 10B2 (in...

Consider an ocean fishery. Suppose the total benefit (TB) is equal to 100B – 10B² (in 1,000 dollars), and the total cost (TC) is equal to 10B, where B is hundreds of boats in the fishery (B=1 is 100 boats).

a ) What's the open-access outcome?

b ) What is the net benefit from this fishery under the unregulated, open-access outcome?

c ) To correct this market failure, what should be the optimal tax rate charged per boat?

Expert Solution

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Rahul Sunny answered 2 years ago

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