Final answer:
Without restrictions, fishing in the Grand Banks is likely inefficient due to the over-exploitation of resources, known as the 'tragedy of the commons.' Individuals might consider it equitable because the resource is available to all, but it may ultimately lead to inequitable outcomes as fish stocks become depleted.
Step-by-step explanation:
Off the coast of Newfoundland, in Canada, lies the Grand Banks, one of the world's richest fishing areas. Without any restrictions on the use of this resource, the amount of fishing in this location is likely to be inefficient, from society's perspective. This is due to what is known as the "tragedy of the commons," where individuals seek to maximize their own benefit to the point that the resource is over-exploited. However, individuals might regard it as equitable, in the sense that many people are able to enjoy the resource without exclusive privileges.
Historical evidence, including the collapse of the northwest cod due to overfishing, underlines the inefficiency of unregulated fishing. This inefficiency arises because each fisher has the incentive to catch as much as possible, leading to overfishing and eventually the depletion of fish stocks. The idea of equity comes from the open-access nature of these areas, allowing many fishers to harvest the resource, but without regulation, this can lead to a situation that is inequitable in the long term as the resource becomes scarce and future generations are left with diminished or no stocks to fish.