Suppose the Alaskan King Crab Harvest Is Unregulated and Any

question 111

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 produce the socially optimal king crab harvest?

• A) Alaska subsidizes the purchase of crab boats.
• B) Alaska auctions a limited number of licenses to harvest king crab.
• C) 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:

Legitimate Source

A credible or reliable source of information that is recognized for its authenticity and accuracy.

Overdrawn

The condition of having withdrawn more money from a bank account than is available, often resulting in penalties.

Wise Decision

A choice made after careful consideration of various factors, reflecting deep understanding and prudent judgment.

Penalty Fee

A financial charge imposed on an individual or organization for not adhering to a contract, rule, or regulation.