-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 uses individual transferable quotas to achieve the efficient outcome, what is the total quantity of fish caught?

Question

Quizplus · Accepted Answer

The efficient outcome is where the marginal social benefit equals the marginal social cost. The marginal social cost is twice the marginal private cost, so the efficient quantity is where the marginal social benefit equals twice the marginal private cost. This is at 100 tonnes.

-The Table Above Shows the Marginal Social Benefit of Fishing