Donald fishes for swordfish at a cost of $6 per ton. Ronny fishes at a cost of $4 per ton. Both have one 1,000-ton ITQ, and the current market price is $10 per ton. If Donald sold his ITQ to Ronny for $5,000, society would benefit from

Question

Quizplus · Accepted Answer

Ronny can fish at a lower cost ($4 per ton) compared to Donald ($6 per ton). By transferring the ITQ to Ronny, society saves $2 per ton for 1,000 tons, resulting in an efficiency savings of $2,000.

Donald Fishes for Swordfish at a Cost of $6 Per