Kara and Kyle Are Competing Sockeye Salmon Fishers

question 330

Multiple Choice

Kara and Kyle are competing sockeye salmon fishers. Both have been allocated ITQs that limit their catch to 2,000 tons of sockeye salmon each. Kara's cost per ton is $7; Kyle's cost per ton is $11. Assume that the market price of sockeye salmon is $16 per ton. If Kara pays Kyle $6 per ton for his ITQs, and if she then catches her new limit of 4,000 tons, her profit would be

• A)$18,000.
• B)$14,000.
• C)$24,000.
• D)$38,000.

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Definitions:

Depreciation

The method of allocating the cost of a tangible asset over its useful life.

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