Suppose fishermen go fishing at a fishery that has no property rights (meaning any fishermen could fish as she liked). The marginal cost of a fishing boat is constant at $100, and the price for each pound of fish sells at $1. Further, assume the relation between the number of vessels and the total catch is given by the following table: Each boat that goes out get an equal share of all the fish caught and there are 8 boats possible. $$\begin{array} { l l }
\begin{array} { l }
\text { Number } \
\text { of } \
\text { Vessels }
\end{array} & \begin{array} { l }
\text { Total } \
\text { Catch } \
\text { (lb) }
\end{array} \
\hline 1 & 400 \
2 & 800 \
3 & 1100 \
4 & 1300 \
5 & 1401 \
6 & 1400 \
7 & 1300 \
8 & 1300 \
\hline
\end{array}$$ If there were no controls over fishing, how many vessels would be sent out fishing?
A)0
B)6
C)7
D)8

Question

Suppose fishermen go fishing at a fishery that has no property rights (meaning any fishermen could fish as she liked). The marginal cost of a fishing boat is constant at $100, and the price for each pound of fish sells at $1. Further, assume the relation between the number of vessels and the total catch is given by the following table: Each boat that goes out get an equal share of all the fish caught and there are 8 boats possible. $$\begin{array} { l l } 
\begin{array} { l } 
\text { Number } \
\text { of } \
\text { Vessels }
\end{array} & \begin{array} { l } 
\text { Total } \
\text { Catch } \
\text { (lb) }
\end{array} \
\hline 1 & 400 \
2 & 800 \
3 & 1100 \
4 & 1300 \
5 & 1401 \
6 & 1400 \
7 & 1300 \
8 & 1300 \
\hline
\end{array}$$ If there were no controls over fishing, how many vessels would be sent out fishing?
A)0
B)6
C)7
D)8

Quizplus · Accepted Answer

Given the scenario of no property rights and the ability for any fisherman to fish as they like, fishermen will continue to add vessels until the marginal benefit of adding another vessel equals the marginal cost. The marginal cost is constant at $100 per fishing boat. The table shows that the total catch starts to decline after the 6th vessel, but since each boat gets an equal share of all the fish caught, fishermen will keep adding boats until the total catch does not increase with an additional boat. This happens when the number of vessels increases from 7 to 8, as the total catch remains at 1300 lbs. Therefore, in the absence of controls, fishermen will send out all 8 vessels to maximize their catch, despite the total catch not increasing after the 7th vessel, because the cost of sending an additional boat ($100) is still covered by the value of the fish caught by each additional boat until the 8th boat.

Suppose Fishermen Go Fishing at a Fishery That Has No