Kara and Kyle are competing sockeye salmon fishers. Both have been allocated ITQs that limit their catch to 2,000 tons of sockeye salmon each. Kara's cost per ton is $8; Kyle's cost per ton is $12. If the market price of sockeye salmon is $15 per ton, and Kara and Kyle both catch their quota, their combined profit will be

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Kara's profit = (15 - 8) * 2,000 = $14,000Kyle's profit = (15 - 12) * 2,000 = $6,000Combined profit = $14,000 + $6,000 = $20,000

Kara and Kyle Are Competing Sockeye Salmon Fishers