Question

Suppose that it costs $200 per day to search for chanterelle mushrooms at Pt. Reyes National Seashore. On an average day, the total weight of mushrooms M found at Pt. Reyes is M = 100x-x^2 pounds ,where x is the number of people mushroom hunting on that day. Chanterelles can be sold for $60 per pound. How many more people will go mushroom hunting than is socially optimal?

Answer 1

Answer:

48 people

Explanation:

When allocating resources to a particular task it is important to assign optimal units of resources.

In this scenario if the people hunting mushrooms are too many they will not make profit. But an optimal number will guarantee everyone makes positive profit.

Optimal = (M÷x)Px - 200= 0

Optimal= {(100x -x^2) ÷ x} * 60 = 200

Optimal = 6000 - 60x = 200

x= 96.666~ 97 people

However to maximise profit MTB = MTC

Socially Optimal quantity = 60(100x - x^2) -200

∂(Socially Optimal amount) ÷ ∂ x= 6000 - 120x - 200

x = 48.33~ 48 people

So 48 more people go mushroom hunting than is socially optimal

Answer 2

For an overall profit, we need at least 97 people to go mushroom hunting.

Any number of people that is more than the socially optimal number should go mushroom hunting on any given day.

Explanation:

The socially optimal number of people that will go mushroom hunting is the number where amount spent to go mushroom hunting equally balances the amount obtained by selling the mushrooms obtained.

If x people go mushroom hunting in a day, the total cost of hunting for that day = 200x

The amount of mushroom obtained is given as

M = (100x - x²) in pounds

The selling price of 1 pound = $60

The cost of M pounds = 60M = 60(100x - x²)

= (6000x - 60x²)

At socially optimal number,

200x = 6000x - 60x²

60x² - 6000x + 200x = 0

60x² - 5800x = 0

x(60x - 5800)

x = 0 or (60x - 5800) = 0

x = 0 or x = (5800/60) = 96.67

Socially optimal number of people = 0 or 96.67

For realistic purposes, we take the socially optimal number of people that went mushroom hunting as 96.67

Any number above this number will result in an overall profit, and any number below it results in an overall loss.

So, for an overall profit, we need at least 97 people to go mushroom hunting.

Hope this Helps!!