-The table above shows the marginal social benefit of fishing in the Mediterranean Sea. The marginal private cost of operating a fishing boat is the same for all producers; $300 per hour. The marginal social cost is twice the marginal private cost. If the government sets a production quota, to have the efficient quantity of fish caught, the quote should equal ________ tonnes of fish.

Question

Quizplus · Accepted Answer

The efficient quantity is where marginal social benefit equals marginal social cost. Since the marginal social cost is twice the marginal private cost, it is $600 per hour. The quota should be set where the marginal social benefit equals $600, which is at 200 tonnes.

-The Table Above Shows the Marginal Social Benefit of Fishing