Asked by Reginald Joseph on Jul 17, 2024
Verified
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.If the market price of Pacific halibut is $40 per ton,and Melanie and Oli both catch their quota,their combined profit will be:
A) $12,000.
B) $22,000.
C) $25,000.
D) $32,000.
Pacific Halibut
A large flatfish found in the North Pacific Ocean, known for its significant value as a commercial and sports fishery resource.
- Familiarize oneself with the conceptual framework and economic importance of Individual Transferable Quotas (ITQs) in fisheries.
Verified Answer
SB
Sahel BaniassadiJul 23, 2024
Final Answer :
D
Explanation :
Melanie's profit = (Market price - Cost per ton) * Quantity = ($40 - $20) * 1000 = $20,000. Oli's profit = (Market price - Cost per ton) * Quantity = ($40 - $28) * 1000 = $12,000. Combined profit = Melanie's profit + Oli's profit = $20,000 + $12,000 = $32,000.
Learning Objectives
- Familiarize oneself with the conceptual framework and economic importance of Individual Transferable Quotas (ITQs) in fisheries.