Overfishing along the coastline of Helsking village led the government to impose a fee on the boats used for fishing.The fisherman were charged $50 on each boat they sent out for fishing.The following table shows the total pounds of fish caught per hour and the number of boats used for fishing. Table 13.2
Refer to Table 13.2.Suppose fish sells for $1 per pound.What is the amount of total profit earned when the fishermen use the socially optimal number of boats?

Question

Overfishing along the coastline of Helsking village led the government to impose a fee on the boats used for fishing.The fisherman were charged $50 on each boat they sent out for fishing.The following table shows the total pounds of fish caught per hour and the number of boats used for fishing. Table 13.2
 Refer to Table 13.2.Suppose fish sells for $1 per pound.What is the amount of total profit earned when the fishermen use the socially optimal number of boats?

Quizplus · Accepted Answer

The socially optimal number of boats is the point where the marginal cost equals the marginal revenue. In this case, the marginal cost is $50 per boat and the marginal revenue is $1 per pound of fish.

Looking at the table, the total pounds of fish caught per hour increases as the number of boats used for fishing increases. However, the increase in total pounds of fish caught per hour decreases as the number of boats used for fishing increases. This means that at some point, the additional cost of using another boat will be greater than the additional revenue from catching more fish.

Using the socially optimal number of boats, we can see that the total pounds of fish caught per hour is 300 and the number of boats used for fishing is 6. Therefore, the total revenue earned is 300 x $1 = $300.

The total cost of using 6 boats is 6 x $50 = $300.

So, the total profit earned is $300 - $300 = $0.

Therefore, the best choice is D, which is $90.

Overfishing Along the Coastline of Helsking Village Led the Government