Suppose the Alaskan King Crab Harvest Is Unregulated and Any

question 171

Multiple Choice

Suppose the Alaskan king crab harvest is unregulated and any person with a crab boat and some diesel fuel can go offshore, lower a crab pot, and harvest king crab.As a result, this common resource is overused.Which of the following policy choices might create an outcome in which the king crab harvest is socially optimal?

• A)The state of Alaska subsidizes the purchase of crab boats.
• B)The state of Alaska auctions a limited number of licenses to harvest king crab.
• C)The state of Alaska removes taxes on diesel fuel, which lowers the price of diesel.
• D)The U.S.and Canadian governments remove trade barriers, which allows for more trade of products like king crab.

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Definitions:

Forum Selection Clause

A contract provision that determines the location and jurisdiction in which disputes will be resolved.

Incorporated

The process by which a business takes on legal status as a corporation, which is recognized as a separate legal entity from its owners, with rights to own assets, incur liabilities, and sue or be sued.

Materially Altered

Describes a significant modification to an object, document, or agreement that changes its original condition or intent.

Merchants

Individuals or businesses engaged in the commercial trade of goods, services, or commodities.