Report

Homework #8 Due Thursday Quiz #4 Thursday Nov. 17th Homework #9 Thursday Nov. 17th Group Outline due Thursday Nov. 17th Exam #4 Dec. 1st What is the difference between a stable and an unstable equilibrium in the population of a fishery? Use a graph to support your answer. Where does the maximum sustained yield occur in your graph? Use a graph with a total cost curve and a total revenue curve for a fishery to show the difference between the economically optimal harvest, the maximum sustained yield, and the open-access equilibrium. What is the typical relationship between the economic optimum (EE), maximum sustained yield (EM), and the open-access equilibrium (EO)? If the price of fish increases, total revenue will increase, shifting the open-access equilibrium higher and the stock of fish lower. As stocks deplete, we move closer to the minimum viable population. Lower stocks imply more scarcity and higher prices. Private Ownership Raise the • NB =0 Real Cost of Fishing Permits or Taxes • Welfare transfer to government ITQs (Individual Transferable Quotas ) • Welfare depends on initial winners and losers ITQs Allocation • Auction • Grandfathering • Lottery Efficient ITQ Market • Quota entitles holder to catch a specified amount of the total authorized catch • Catch authorized is equal to the efficient catch for the fishery • Quotas should be freely transferable among fishermen Stock 10 20 30 40 50 60 70 80 90 100 Growt h 0 800 1600 2400 2800 3000 2800 2200 1200 0 Find the MSY, natural equilibriums, and identify the stable and unstable equilibriums Price = $1,000/ton Cost per Boat is $4,000 Construct a graph showing the relationship between stock and growth Construct a graph showing the relationship between stock and the growth rate What stock level corresponds to the maximum growth rate? What stock level corresponds to the MSY? Growth Rate 7 6 6 5.3 5 4 3 4 5.6 5 4 2.75 Growth Rate 2 1 0 -1 -2 1.33 0.75 0 -1 Growth 3500 3000 2500 2000 1500 1000 500 0 Growth 10 20 30 40 50 60 70 80 90 100 Identify the stable and unstable equilibriums in a natural state. Now assume that we can translate this population/yield relationship into an economic relationship between fishing boats and total product. Boats 100 200 300 Total Product 1200 2200 2800 400 500 600 700 800 900 3000 2800 2400 1600 800 0 Fish prices average $1,000 tons and the cost to operate a fishing boat for a year is $4,000. Construct a graph showing total revenue and total costs in the fishery. Derive graphs showing marginal and average revenue and marginal cost. 4,000,000 3,500,000 3,000,000 2,500,000 Total Revenue Total Cost 2,000,000 1,500,000 1,000,000 500,000 0 100 200 300 400 500 600 700 800 900 A natural state with no fishing industry A fishing industry obtaining the MSY from the fishery A fishing industry operating under an efficient management plan, with economically optimal returns A fishing industry characterized by open access.