Kara and Kyle are competing sockeye salmon fishers. They have been allocated ITQS (individual transferable quotas) that limit theirtotal catch to 2,000 tons of sockeye salmon per fisher. Kara's costs of catching salmon are $6 per ton, and Kyle's costs are $10 per ton.Instructions: Enter your answers as a whole number.a. If the market price of sockeye salmon is $15 per ton, and Kara and Kyle both catch their quota, what will be their combined profit?b. What is the maximum amount Kara would be willing to pay per ton for Kyle's ITQS?per tonc. What is the minimum amount per ton that Kara would have to offer Kyle to convince him to sell his ITQS to her?$per tond. If Kara pays Kyle $6 per ton for his ITQS, and if she then catches her new limit of 4,000 tons, what will be their combined profit?

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Business

Economics

costs

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Kara and Kyle are competing sockeye salmon fishers. They have been allocated ITQS (individual transferable quotas) that limit their
total catch to 2,000 tons of sockeye salmon per fisher. Kara's costs of catching salmon are $6 per ton, and Kyle's costs are $10 per ton.
Instructions: Enter your answers as a whole number.
a. If the market price of sockeye salmon is $15 per ton, and Kara and Kyle both catch their quota, what will be their combined profit?
b. What is the maximum amount Kara would be willing to pay per ton for Kyle's ITQS?
per ton
c. What is the minimum amount per ton that Kara would have to offer Kyle to convince him to sell his ITQS to her?
$
per ton
d. If Kara pays Kyle $6 per ton for his ITQS, and if she then catches her new limit of 4,000 tons, what will be their combined profit?

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