Suppose that in Horsehead, Massachusetts, the cost of operating a lobster boat is $4,000 per month.Suppose that if x lobster boats operate in the bay, the total monthly revenue from lobster boats in the bay is $1,000(28x - x²).If there are no restrictions on entry and new boats come into the bay until there is no profit to be made by a new entrant, then the number of boats who enter will be X₁.If the number of boats that operate in the bay is regulated to maximize total profits, the number of boats in the bay will be X₂. A)X₁ = 12 and X₂ = 10. B)X₁ = 28 and X₂ = 16. C)X₁ = 24 and X₂ = 12. D)X₁ = 24 and X₂ = 24. E)None of the above.

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X₁ is found where revenue per boat equals cost, solving 28 - x = 4 gives x = 24. X₂ is found by maximizing profit, solving 28 - 2x = 0 gives x = 14. However, the closest option is C with X₂ = 12.

Suppose That in Horsehead, Massachusetts, the Cost of Operating a Lobster