Suppose That in Horsehead, Massachusetts, the Cost of Operating a Lobster

question 16

Multiple Choice

Suppose that in Horsehead, Massachusetts, the cost of operating a lobster boat is $2,000 per month.Suppose that if x lobster boats operate in the bay, the total monthly revenue from lobster boats in the bay is $1,000(10x - x²) .If there are no restrictions on entry and new boats come into the bay until there is no profit to be made by a new entrant, then the number of boats who enter will be X₁.If the number of boats that operate in the bay is regulated to maximize total profits, the number of boats in the bay will be X₂.

• A)X₁ = 8 and X₂ = 8.
• B)X₁ = 4 and X₂ = 2.
• C)X₁ = 8 and X₂ = 4.
• D)X₁ = 12 and X₂ = 8.
• E)None of the above.