Question

Paragraph: A lake supports a variety of fish. The land around the lake is owned by two fisherman, so by state law both are free to fish as much as they like. Let FA and FB be the number of fish each catches, respectively. Suppose the price of fish is 100 - FA - FB. Given this demand curve, it turns out that marginal revenue is 100 - 2FA - FB for fisherman A and 100 - FA - 2FB for fisherman B.

Question: What would happen if marginal costs for Fisherman A went up but stayed the same for Fisherman B, and what is the potential risk associated with both fishermen having access to the common resource of fish?

Answer 1

ANSWER

we know that fisherman A would catch's less fish's and fisherman B would catch's more fishes  

Answer 2

If the marginal costs for Fisherman A increase while staying the same for Fisherman B, it would affect their profit margins and fishing behavior.

With higher marginal costs, Fisherman A would experience a decrease in profitability compared to Fisherman B. This change would likely incentivize Fisherman A to reduce their fishing efforts or even cease fishing altogether if the costs outweigh the potential returns. On the other hand, Fisherman B would continue fishing as before, unaffected by the cost increase.

The potential risk associated with both fishermen having access to the common resource of fish is overexploitation or depletion of the fish population. Since both fishermen are free to fish as much as they like, there is a lack of regulation or control over the fishing activities. This unrestricted access may lead to excessive fishing efforts, which can deplete the fish population and harm the sustainability of the ecosystem.

If the fish population declines significantly due to overfishing, it could have severe consequences for both fishermen in the long run. They might face reduced catches, lower profits, or even a complete collapse of the fishery, impacting their livelihoods and the availability of the resource itself. The absence of proper management and regulations increases the vulnerability of the common resource, posing a risk to the sustainability of the fishery and the well-being of the fishermen in the long term.