1.The following table shows the total catch of a small fishery

# boats/units of effort TOTAL CATCH (KG)

1 25

2 48

3 69

4 88

5 100

6 108

7 112

8 112

9 108

10 100

Assume that the price is $1 per kilogram of fish and marginal costs are constant and equal to 10 dollars per boat.

a) Find the socially optimal level of boats/units of effort.

b) Find an open access level of boats/units of effort.

c) Assume that the government decides to use the tax policy in order to achieve the socially efficient number of boats/units of effort. Find the optimal tax rate per boat.

d) Now assume that instead of tax policy the government uses the total allowable catch (TAC) policy. TAC is set by the government at 69 kg. How many boats will operate at this level of yield? Explain.