The demand for fishing on the salmon river for two individuals A and B are as follows: QA(P) = 40-2P QB(P) = 30-P where Q is the number of fish, and P represents the marginal value of fish caught (in dollars). Suppose again that the demands describe fish caught and kept for eating (fish catch/keep is divisible/rivalrous as in question 1), but only 40 fish total are allowed to be caught and kept (assume the Fish and Game Department does not charge for fishing - they just limit the number allowed to be caught). (a) If each fisher is allowed to catch and keep 20 fish, what would be the marginal value of the 20th fish for each fisher? (b) If each fisher is allowed to catch and keep 20 fish, what is the total surplus for each fisher, and total surplus for both (ignoring any costs of fishing)? (c) Suppose the fishers were allowed to transfer their fishing rights. What would be the optimal allocation of fish between the two individuals, who would sell to whom and at what price? Graphing this problem is not required to receive credit, but is strongly recommended. (d) What would be the total surplus from the optimal allocation, and how does it compare to the surplus in 3 (b)?
2. The demand for fishing on the salmon river for two individuals A and B are as follows:
QA(P) = 40-2P
QB(P) = 30-P
where Q is the number of fish, and P represents the marginal value of fish caught (in dollars).
Suppose again that the demands describe fish caught and kept for eating (fish catch/keep is divisible/rivalrous as in question 1), but only 40 fish total are allowed to be caught and kept (assume the Fish and Game Department does not charge for fishing - they just limit the number allowed to be caught).
(a) If each fisher is allowed to catch and keep 20 fish, what would be the marginal value of the 20th fish for each fisher?
(b) If each fisher is allowed to catch and keep 20 fish, what is the total surplus for each fisher, and total surplus for both (ignoring any costs of fishing)?
(c) Suppose the fishers were allowed to transfer their fishing rights. What would be the optimal allocation of fish between the two individuals, who would sell to whom and at what price? Graphing this problem is not required to receive credit, but is strongly recommended.
(d) What would be the total surplus from the optimal allocation, and how does it compare to the surplus in 3 (b)?
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