Suppose as before that average income increases from US$5,000 to US$5,500 and th
ID: 1092549 • Letter: S
Question
Suppose as before that average income increases from US$5,000 to US$5,500 and the cost of catching fish decreases from US$2,500 per ton to US$2,000 per ton.If governments imposed taxes on fish instead of offering subsidies, they could reduce the catch back to the maximum sustainable yield.
How large a tax per ton of fish caught would governments need to impose on fish suppliers in order to bring the quantity of fish back down to the maximum sustainable catch of fish (30 million tons)? A. US$100 per ton of fish B. US$700 per ton of fish C. US$1,000 per ton of fish D. US$300 per ton of fish Use the calculator below to answer the question. The thin vertical line, which is stationary, shows the maximum sustainable catch. The horizontal orange line is the supply curve in this model. Tool tip: Use your mouse to drag the vertical green line on the graph. The values in the boxes on the right side of the calculator will change accordingly. You can also directly change the values in the boxes with the white background by clicking in the box and typing. The graph and any related values will change accordingly. Suppose that average income in the world and the cost of catching fish are both equal to their initial values. US$5,000 per year for income and US$2,500 per ton for cost. True or False: With these values, the equilibrium catch of fish caught is less than the maximum sustainable catch indicated by the stationary' thin vertical line.
Explanation / Answer
A. US$100 per ton of fish