Consider once more the situation in Problem 3. Explain two policies that do not involve a fee
Question:
Consider once more the situation in Problem 3. Explain two policies that do not involve a fee that could result in the optimal level of effort. What complications might arise in the administration of these policies?
Problem 3
Wild morel mushrooms are a delicacy in soups and salads. The following table shows the number of mushrooms that can be harvested per picker per hour in a fictional forest, depending on the number of pickers.
a) Assuming that each mushroom sells for $1, graph the average and marginal revenue for society at each level of effort (number of pickers).
b) Given that the opportunity cost of each picker's time is $10 per hour, label the socially optimal number of pickers and the number of pickers that will enter if the forest is an open-access resource. Explain why the pickers will dissipate the economic rent.
Step by Step Answer:
Environmental Economics And Natural Resource Management
ISBN: 9780415640954
4th Edition
Authors: David A. Anderson