The following data refers to the number of logging operations working in a stretch of tropical rainforest per week. Excluding externalities, the private cost of a logging operation is $25 thousand per week. Logs sell for $1 a piece. Fill in the chart below. # of operations total harvest average harvest average revenue marginal harvest marginal revenue marginal profit 0 0 1 40 2 75 3 105 4 130 5 150 6 165 7 175 8 180 What is the number of logging operations in the forest that maximizes total profit? How much total resource rent is generated at this level of harvest? With open access to the forest, how many folks will wind up logging? With open access, will there be any resource rent earned by the loggers? Suppose the total externalities associated with deforestation could be valued at $10,000 per operation. What is the efficient number of operators? What is the open access number of operators? Suppose access to the forest is controlled by a (perfectly enforced) fee system to limit the logging operation at the efficient level. What (weekly) fee would have to be charged to insure an efficient harvest level?\ without externalities with externalities

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

The following data refers to the number of logging operations working in a stretch of tropical rainforest per week. Excluding externalities, the private cost of a logging operation is $25 thousand per week. Logs sell for $1 a piece. Fill in the chart below.

# of operations	total harvest	average harvest	average revenue	marginal harvest	marginal revenue	marginal profit
0	0
1	40
2	75
3	105
4	130
5	150
6	165
7	175
8	180

What is the number of logging operations in the forest that maximizes total profit? How much total resource rent is generated at this level of harvest?
With open access to the forest, how many folks will wind up logging? With open access, will there be any resource rent earned by the loggers?
Suppose the total externalities associated with deforestation could be valued at $10,000 per operation. What is the efficient number of operators? What is the open access number of operators?
Suppose access to the forest is controlled by a (perfectly enforced) fee system to limit the logging operation at the efficient level. What (weekly) fee would have to be charged to insure an efficient harvest level?\
- without externalities
- with externalities