The town of Grayling has 10 thousand residents who produce fish from fish farms and lakes. Each person who works on a fish farm produces 2 fish per day. Each person who fishes in a lake produces 10-X fish per day where X is the number of people (in thousands) who fish in the lakes. If every individual who fishes a lake is charged a tax of T fish, what value of T causes the Nash Equilibrium behavior to produce the largest possible number of fish for the town as a whole? (You can assume that the 'taxes' collected are shared among all of the residents)

The town of Grayling has 10 thousand residents who produce fish from fish farms and lakes. Each person who works on a fish farm produces 2 fish per day. Each person who fishes in a lake produces 10-X fish per day where X is the number of people (in thousands) who fish in the lakes. If every individual who fishes a lake is charged a tax of T fish, what value of T causes the Nash Equilibrium behavior to produce the largest possible number of fish for the town as a whole? (You can assume that the 'taxes' collected are shared among all of the residents)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.4P

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