Industrial Policy: Australian lobster people fear a collapse of the lobster industry from over-harvesting. They are comparing various policy options for regulation. Use the following information to analyze their choice.Suppose it costs $198 for each lobster trap set. Lobsters sell for $22. If X traps are set, the harvest rate of lobsters, L, as a function of the number of traps, is given by:L = 199X - X^2a. With no restrictions (competitive markets exist) on the number of traps, and open access to the waters, how many traps will be set? How many lobsters will be harvested? How much profit will be realized from lobstering?b. Suppose lobster people could limit the number of traps permitted. How many traps should be permitted, if Australia wanted to maximize overall profits from lobstering? How many lobsters would be harvested? What would total profits be from lobstering?Note: Prices are fixed at $22 and traps cost $198 each. Homework #4Industrial Policy: Australian lobster people fear a collapse of the lobster industry fromover-harvesting. They are comparing various policy options for regulation. Use the followinginformation to analyze their choice.Suppose it costs $198 for each lobster trap set. Lobsters sell for $22. If X traps are set, theharvest rate of lobsters, L, as a function of the number of traps, is given by:L 199X X^2a. With no restrictions (competitive markets exist) on the number of traps, and open access tothe waters, how many traps will be set? How many lobsters will be harvested? How much profitwill be realized from lobstering?b. Suppose lobster people could limit the number of traps permitted. How many traps should bepermitted, if Australia wanted to maximize overall profits from lobstering? How many lobsterswould be harvested? What would total profits be from lobstering?Note: Prices are fixed at $22 and traps cost $198 each.

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Answered: Homework #4 Industrial Policy:…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Industrial Policy: Australian lobster people fear a collapse of the lobster industry from over-harvesting. They are comparing various policy options for regulation. Use the following information to analyze their choice. Suppose it costs $198 for each lobster trap set. Lobsters sell for $22. If X traps are set, the harvest rate of lobsters, L, as a function of the number of traps, is given by: L = 199X - X^2 a. With no restrictions (competitive markets exist) on the number of traps, and open access to the waters, how many traps will be set? How many lobsters will be harvested? How much profit will be realized from lobstering? b. Suppose lobster people could limit the number of traps permitted. How many traps should be permitted, if Australia wanted to maximize overall profits from lobstering? How many lobsters would be harvested? What would total profits be from lobstering? Note: Prices are fixed at $22 and traps cost $198 each.