Melanie and Oli are competing Pacific halibut fishers. Both have been allocated ITQs that limit their catch to 1,000 tons of Pacific halibut each. Melanie's cost per ton is $20; Oli's cost per ton is $25. If the market price of Pacific halibut is $35 per ton, and Melanie and Oli both catch their quota, their combined profit will be

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Melanie's profit = (Market price - Cost per ton) * Quantity = ($35 - $20) * 1000 = $15,000. Oli's profit = (Market price - Cost per ton) * Quantity = ($35 - $25) * 1000 = $10,000. Combined profit = Melanie's profit + Oli's profit = $15,000 + $10,000 = $25,000.

Melanie and Oli Are Competing Pacific Halibut Fishers