The graph shows the market for North Atlantic tuna. The quantity of tuna caught

Question

The graph shows the market for North Atlantic tuna. The quantity of tuna caught is tons a month and the price of tuna is sa ton. The tuna stock is being used O A. efficiently, marginal social benefit equals marginal social cost O B. efficiently; marginal private cost equals marginal social benefit O C. inefficiently and overfishing is occurring: the quantity produced is less than the quantity at which because at the equilibrium quantity marginal social cost equals marginal social benefit inefficiently and overfishing is occurring: marginal social benefit exceeds marginal social cost D. OE. inefficien tly and overfishing is occurring: marginal social cost exceeds marginal social benefit When the tuna stock is used efficiently, the price of tuna is s l a ton.

Explanation / Answer

The quantity of Tuna caught is where MSB =MC i.e 80 tons per month and the price of tuna is $100 per ton.

The Tuna stock is being used inefficiently and overfishing is occuring because marginal social cost exceeds marginal social benefit.

When the Tuna stock is used efficiently , it occurs when MSB=MSC , then the price of tuna is $150 per ton and quantity is 40 tons per month.

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