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ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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?
Transcribed Image Text: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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