10. Assignment 2 Flashcards
What is sustainable harvesting?
Quantity harvested such that stock size does not decrease.
True or false: if a harvest is on the curve, it will not move anywhere else.
True.
Can fish stocks turn negative?
No.
When is a lower fishing effort more profitable?
If MC > MR
When is a higher fishing effort more profitable?
If MC < MR
Where is the economic optimum?
Where MR : MC
True or false: at the MSY we obtain the maximum quantity of the fish stock that can be harvested without depleting the stock.
True.
What are total industry profits in the open access equilibrium?
Zero.
True or false: when total industry profits is zero, this means that the fish stock has been depleted.
False. It can also mean that total revenue equates total costs.
What will happen when efficient technology is banned?
This increases marginal costs and total costs. Effort will decrease.
What do MAC curves represent?
The additional cost of achieving one more unit decrease in level of emissions.
Why do marginal abatement costs rise?
Cheaper options for reducing pollution are exhausted.
What is the equimarginal principle?
The balancing of marginal costs and marginal benefits to achieve the efficient outcome.
This is where two MACs equate.
What is usually required for the equimarginal principle to be achieved?
Trade.
At what point will firms stop trading permits?
When permits become more expensive then marginal abatement costs.
