Linda fishes for mahi-mahi at a cost of $10 per ton. Tessa fishes at a cost of $8 per ton. Both have one 1,000-ton ITQ and the current market price is $13. If Linda sold her ITQ to Tessa for $4,000, society would benefit from

A) more fish being caught.
B) less fish being caught.
C) an efficiency savings in fishing costs of $2,000.
D) an efficiency savings in fishing costs of $5,000.

Question

Gregory Steinberger · Accepted Answer

Final Answer : C, Explanation :  Tessa fishes at a lower cost ($8 per ton) compared to Linda ($10 per ton). If Tessa uses both ITQs, she saves $2 per ton on 1,000 tons, totaling $2,000 in savings, which represents an efficiency gain for society.

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