Tons of fish | Marginal social benefit (dollars per hour) |
100 | 700 |
200 | 600 |
300 | 500 |
400 | 400 |
500 | 300 |
600 | 200 |
The table above shows the marginal social benefit of fishing in Mediterranean Sea. The marginal private cost of operating a fishing boat is the same for all producers, $300 per hour. The marginal social cost is twice the marginal private cost. With no government intervention, the market is
◦ catching the efficient quantity of fish.
◦ underproducing by 100 tons of fish.
◦ underproducing by 300 tons of fish.
◦ overproducing by 300 tons of fish.
◦ overproducing by 200 tons of fish.