Question 140 marks) In a fishery the long-run harvest function (harvest volume) is (8) all-be, with a, b representing positive constants and is fishing effort Total cost is TC(C)=c, with e being the unit cost of effort Total revenue is TR(E) - pH(E), with p being the constant price of fish. a) Find the open-access equilibrium values of effort and harvest. (4 marks) b) Find the fishing effort that maximizes resource rent, Exer, and the corresponding harvest. HT (4 marks) c) Find the fishing effort that maximizes sustainable yield (harvest). Eusy. (2 marks) d) Explain why higher levels of effort (2) beyond a certain point are associated with reductions in long-run total revenue (TR). (3 marks) c) Explain why it generally is not efficiency-maximizing for society to supply the level of fishing effort that maximizes the sustainable yield. (2 marks) Suppose that, because of an increase in world demand, the price of the fish from this fishery rises significantly Illustrate and explain the impact of this price-increase on the fish stock and the competitive level of effort (or employment) in the fishery. (5 marks) (ii) What can be said about the long-run impact on the fish catch? Is it positive. negative, or indeterminate? Explain. (5 marks) 8) Suppose a management council decides to regulate this fishery for the first time. The management council is considering two alternative policies: a tax on the fish catch, and freely allocated individual transferable quotas (ITQS). () Carefully discuss the impact of the two proposed policies. (10 marks) (11) In your opinion, which policy should be implemented by the management council? Explain. (5 marks) 3