Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 19, Problem 19.2P
a)
To determine
The total number of fish that are caught.
b)
To determine
The number that should be allowed to fish to maximize the fish catching on Lake x and the number of fishes that can be caught at this stage.
c)
To determine
The cost of license if the procedure of licensing can bring optimal allocation of labor for lake x.
d)
To determine
The way through which example shows the connection between property rights and externalities.
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Consider two neighboring island countries called Dolorium and Contente. They each have 4 million labor hours available per week that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor.
Country
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Jeans
(Bushels per hour of labor)
(Pairs per hour of labor)
Dolorium
5
20
Contente
8
16
Initially, suppose Contente uses 1 million hours of labor per week to produce rye and 3 million hours per week to produce jeans, while Dolorium uses 3 million hours of labor per week to produce rye and 1 million hours per week to produce jeans. Consequently, Dolorium produces 15 million bushels of rye and 20 million pairs of jeans, and Contente produces 8 million bushels of rye and 48 million pairs of jeans. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of rye and jeans…
Consider two neighboring island countries called Euphoria and Contente. They each have 4 million labor hours available per week that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor.
Country
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Jeans
(Bushels per hour of labor)
(Pairs per hour of labor)
Euphoria
5
20
Contente
8
16
Initially, suppose Contente uses 1 million hours of labor per week to produce rye and 3 million hours per week to produce jeans, while Euphoria uses 3 million hours of labor per week to produce rye and 1 million hours per week to produce jeans. Consequently, Euphoria produces 15 million bushels of rye and 20 million pairs of jeans, and Contente produces 8 million bushels of rye and 48 million pairs of jeans. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of rye and jeans…
Chapter 19 Solutions
Microeconomic Theory
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