The construction of a beach-front resort has led to erosion of the seabed, destruction of corals and reducing the catch of fishermen operating in the vicinity. Draw a diagram to analyse the efficiency issue in this incident. If the fishermen and the resort owner can negotiate costlessly and the fishermen has the legal right to the sea that is free from any damages, how would this problem be resolved?

The construction of a beach-front resort has led to erosion of the seabed, destruction of corals and reducing the catch of fishermen operating in the vicinity. Draw a diagram to analyse the efficiency issue in this incident. If the fishermen and the resort owner can negotiate costlessly and the fishermen has the legal right to the sea that is free from any damages, how would this problem be resolved?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 2.3IP

See similar textbooks

Similar questions

Why is air pollution a matter of ethics?
Your neighbors pay annual dues to a neighborhood association. This association refunds neighborhood dues to selected home owners who do a particularly nice job in beautifying their yards. a) Why might the neighborhood association provide this refund?
(a) The construction of a beach-front resort has led to erosion of the seabed, destruction of corals and reducing the catch of fishermen operating in the vicinity. Draw a diagram to analyse the efficiency issue in this incident. If the fishermen and the resort owner can negotiate costlessly and the fishermen has the legal right to the sea that is free from any damages, how would this problem be resolved? (b) Consider a product market with three consumers A, B and C with demand function PA = 6 – QA, PB = 6 – 2QB and PC = 12 – QC respectively, where P is the price in dollars and QA, QB and QC are the quantities demanded by Consumer A, B and C respectively. The marginal cost of the product is constant at $4. (i) If the product is public good, analyse the product and determine the optimal quantity of the product in the market.(ii) How will your answer be different if the product is a private good instead? Hi, may i request for a more detailed explanation to this question? thank you for…
(a) The construction of a beach-front resort has led to erosion of the seabed, destruction of corals and reducing the catch of fishermen operating in the vicinity. Draw a diagram to analyse the efficiency issue in this incident. If the fishermen and the resort owner can negotiate costlessly and the fishermen has the legal right to the sea that is free from any damages, how would this problem be resolved? (b) Consider a product market with three consumers A, B and C with demand function PA = 6 – QA, PB = 6 – 2QB and PC = 12 – QC respectively, where P is the price in dollars and QA, QB and QC are the quantities demanded by Consumer A, B and C respectively. The marginal cost of the product is constant at $4. (i) If the product is public good, analyse the product and determine the optimal quantity of the product in the market. (ii) How will your answer be different if the product is a private good instead?
Suppose you are part of an economic analysis team charged with recommending a policy response to pesticide risks. Explain the steps your team should take and why.
What public policy approach would be most reasonable to protect consumers from harmful products? How might market and economic forces play a role in protecting consumers?
Please solve part d,e and f!!! Three roommates, Jim, Saleem, and Ritesh, are thinking about buying a new speaker system for their apartment. The speaker system would be a public good if they buy them, and the total cost would be $300 which would be shared equally among the three. Jim values it at $80, Saleem values it at $140, and Ritesh values it at $70. If the speakers are purchased each person gets a payoff equal to their net valuation (valuation minus cost share); if they are not purchased each gets zero payoff. a)Is it socially efficient that they buy the speaker system? With reference to the definition of a public good, why or why not? The roommates decide that they will write down their net valuations, and if these reports sum to more than zero, they will buy the TV (sharing the cost equally), or else they will not. b) If all were to report their true valuations, what payoff would each agent earn? c) Show that if Jim and Ritesh submit their true net valuation, then Saleem does…
What is the role of government in air transportation? Include both economic and safety regulations in your answer.
Cap and Trade policies are among the best environmental policies being used. However, it can be argued that they allow inefficient, high polluting sources to continue polluting. Is there a better way? What changes if any, would you make if you were the head of the EPA (Environment Protection Agency).
Apolluting firm dumps waste into the ocean during production. The loss in value due to damaging the fish stack is valued at $100,000 (you can think of this as lost profits for fishing firms). The firm could eliminate the pollution at a cost of $60,000 a year. Choose the statement that describes the expected efficient outcome if the polluting firm has property rights over the ocean. The firm continues to pollute The polluting firm pays the $60,000 to eliminate pollution The fishing firms pay the $60,000 to eliminate pollution The polluting firm and fishing firms share the $60,000 cost of eliminating pollution
Define Encouraging or discouraging consumption
Why is the permit needed for all the agencies?