Home / Questions / Eric and Kyle are fishermen with different equipment and, as a result, different costs fo
Eric and Kyle are fishermen with different equipment and, as a result, different costs for catching fish. Eric’s costs for catching fish are $1,000 per ton for the first five tons and then $2,500 per ton for any additional tons. Kyle can harvest fish at a cost of $3,000 for the first 15 tons and then $1,400 for any additional tons.
a. If society wants 30 tons of fish and for some reason will only allow one of the two guys to do all the fishing, which guy should society choose if it wants to minimize the cost of catching those 30 tons of fish? How much will the total cost of catching the fish be? What will the average cost per ton be for the 30 tons?
b. If society wants 30 tons of fish and wants them for the least cost regardless of which guy is catching them, how much should Eric and Kyle each catch? How much will the total cost of catching 30 tons be? What will the average cost per ton be for the 30 tons?
c. Suppose that Eric and Kyle can both sell whatever amount of fish they catch for $3,000 per ton. Also suppose that Eric is initially given ITQs for 30 tons of fish while Kyle is given ITQs for zero tons of fish. Suppose that Kyle is willing to pay Eric $550 per ton for as many tons of ITQs as Eric is willing to sell to Kyle. How much profit would Eric make if he used all the ITQs himself? What if Eric sold 25 tons’ worth of his ITQs to Kyle while using the other 5 tons of ITQs to fish for himself?
d. What price per ton can Kyle offer to pay Eric for 25 tons of ITQs such that Eric would make exactly as much money from that deal (in which he sells 25 tons’ worth of his ITQs to Kyle while using the rest to fish for himself) as he would by using 30 tons of ITQs for himself?
Dec 05 2019 View more View Less
A project requires an initial investment of $200,000 and expects to produce a cash flow before taxes of 120,000 per year for two years (i.e., cash flows will occur at t =...
May 29 2021What is a tax bracket? What is the relationship between filing status and the width of the tax brackets in the tax rate schedule?2-3 paragraphs
Jul 22 2021Loring Company incurred the following costs last year: Direct materials ..................$216,000 Factory rent ...................24,000 Direct labor ......................
Jun 25 2020One of the major U.S. tire makers wishes to review its warranty for their rainmaker tire. The warranty is for 40,000 miles. The tire company believes that the tire actual...
Apr 08 2020A 125-mL Erlenmeyer flask has a measured volume of 152 mL. A 0.199 g sample of an unknown vapor occupies he flask at 98.7 celsius and a pressure of 754 torr. How many mol...
May 21 2021How much and to whom do businesspeople listen?YOUR TASK. Interview a businessperson about his or her workplace listening. Connect with a worker in your circle of friends,...
Aug 20 2021Problem 2-2A Preparing and posting journal entries; preparing a trial balance LO C3, C4, A1, P1, P2Aracel Engineering completed the following transactions in the month of...
Apr 04 2020The Cardiovascular Association is a group that is open only to heart surgeons. The Cardiovascular association is an example of a:a.citizen group.b.think tank.c.profession...
Dec 12 2019Matthews Delivery Service, Inc., completed the following transactions during its first month of operations for January 2012:a. Matthews Delivery Service, Inc., began oper...
Jun 19 2020Two dice are rolled. The sum of the outcomes is denoted by X and the absolute value of their difference by Y. Calculate the joint probability mass function of X and Y and...
Aug 03 2020