Assume a small island economy with a fixed number of inhabitants, which operates under a closed economy model without trade or external aid. The island's currency is the Shell (Sh), and its economy is based on two primary goods: coconuts and fish. The production technology for both goods has not changed over years, and there is no expectation of technological progress in the near future. The residents consume both goods, but due to recent overfishing and a blight affecting coconut palms, there is a concern about future scarcity of both resources. An economist studying the island proposes a policy of conservation, suggesting limits on fishing and coconut harvesting. Assess the likely short-term and long-term economic impacts of this policy on the island's price levels, consumer behavior, and general well-being of the inhabitants, considering the current lack of growth factors and external influences. a) In the short term, what would be the likely impact of conservation policies on the prices of fish and coconuts? b) How might the conservation policy affect the island's consumer surplus and producer surplus in the long term? c) Discuss the potential for changes in the island inhabitants' standard of living if the policy successfully prevents resource depletion. d) How might the absence of technological progress influence the effectiveness of the conservation policy and the island's overall economic resilience?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

100%

"Assume a small island economy with a fixed number of inhabitants, which operates under a closed economy model without trade or external aid. The island's currency is the Shell (Sh), and its economy is based on two primary goods: coconuts and fish. The production technology for both goods has not changed over years, and there is no expectation of technological progress in the near future. The residents consume both goods, but due to recent overfishing and a blight affecting coconut palms, there is a concern about future scarcity of both resources. An economist studying the island proposes a policy of conservation, suggesting limits on fishing and coconut harvesting. Assess the likely short-term and long-term economic impacts of this policy on the island's price levels, consumer behavior, and general well-being of the inhabitants, considering the current lack of growth factors and external influences. a) In the short term, what would be the likely impact of conservation policies on the prices of fish and coconuts? b) How might the conservation policy affect the island's consumer surplus and producer surplus in the long term? c) Discuss the potential for changes in the island inhabitants' standard of living if the policy successfully prevents resource depletion. d) How might the absence of technological progress influence the effectiveness of the conservation policy and the island's overall economic resilience?"

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions