Complete Question:
At the Santa Barbara fishing hole, people come from all around to catch fish to sell at the fish market.The total number of fish caught is F=100x-0.5x^2 where x is the number of fishermen. Suppose it costs each person $700 a day to fish and that fish sell for $10 each at the market. At the social optimum, how much would it hurt the whole society (combined) if one more person started fishing?
Answer:
Santa Barbara Fishing Hole
At the social optimum, the amount by which it would hurt the whole society (combined) if one more person started fishing is:
= $297.50
Step-by-step explanation:
a) Data and Calculations:
The total number of fish caught is F = 100x-0.5x^2
where x = the number of fishermen
Daily fixed cost of fishing per person = $700
Sales price per fish = $10
F = 100 * 1 - (0.5 * 1)^2
F = 100 - 0.25
F = 99.75
Total cost to society for one person fishing ($10*99.75) = $997.50
Total benefit to society from one person fishing = 700.00
Combined cost to society with one person fishing = $297.50