The three outcomes in which the government uses licenses to limit the catch

1. This table summarizes the results from an experiment like yours. Compare the outcome under free access withthe three outcomes in which the government uses licenses to limit the catch. Roughly how much additionalprotein is there for the economy in the rounds in which the government required fishing licenses?Total Protein for the EconomyRules(Pounds)Free access to the fishery588Licenses given by lottery at the beginning of the year648Licenses given by lottery at the beginning of each month645Licenses auctioned off at the beginning of each month648A. 60 pounds of proteinB. 645 pounds of proteinC. 590 pounds of proteinD. 3 pounds of protein2.True or False: In the previous table, all the rounds with licenses lead to a sustainable outcome, soconsumption in the future will also be higher than it would be under free access.TrueFalse3.True or False: No matter how many licenses the government gives out, rules with licenses willlead to a sustainable outcome.TrueFalse4. Three students notice that in the experiment, the total catch of protein is higherwhen the government uses licenses to restrict the catch of fish. They make thefollowingstatements:i. "With no limits on fishing, the stock eventually falls below the level necessaryforthefishtoreproduce."ii. "Hunting is more productive than fishing, even when there are lots of fish, sofishing licenses raise output by forcing more people to hunt."iii. "With limits on fishing, fewer total fish are caught in the early months of ayear,butmorearecaughtinlatermonths."Select the answer below that identifies which of these statements is correct.A. Only statements i andiii are correct.B. Only statement i is correct.C. Only statement ii is correct.D. Only statements ii and iii are correct.E. Statements i, ii, and iii are all correct.F. Only statements i and ii are correct.G. Only statement iii is correct.5.Another student suggests that in real life (as opposed to economicexperiments), a fishery is depleted under free access because people don’tunderstand what is happening. This student suggests that the governmentdoes not need to impose any limits on fishing. All it needs to do is make surethat people who fish take an economics course so that they understand how toact in a way that maximizes their self-interest.You must decide if economic analysis supports this student’s claim. If everyonetook an economics course, do you expect that they would adjust their behaviorand keep the catch below the number of fish born each year?A. Yes. Because peoplerespond to self-interest,they will all refrain fromtaking too many fish oncethey understand thesituation.B. No. Even if they understand what the problem is for a large group,each person will be able to get more food by going fishing. Someonewho understands the problem wants everyone else to stop fishing butpersonally wants to keep fishing.6. In this experiment, the three rules for awarding fishing licenses differ primarily in theeffect that they have on the distribution of benefits in a society. With the same totalamount of food, these rules lead to a different split among the members of thecommunity. Recall that under the auction system, the government gives the protein itcollects from auctioning the licenses to everyone in the economy as a kind of rebate.Here are three graphs that show the distribution of consumption for an experiment with24 participants. Each graph shows the outcomes of a different rule that limits fishing.6.1. Of the following three rules, which leads to the largest amount of inequality,where inequality is measured as the difference between the persons with themost and least consumption?A. Licenses awarded bylottery at the beginning ofeach monthB. Licenses awarded by lottery at the beginning of the yearC. Licenses that are sold at auction each month with the revenueshared among all members of the communityIn this experiment, the three rules for awarding fishing licenses differ primarily in theeffect that they have on the distribution of benefits in a society. With the same totalamount of food, these rules lead to a different split among the members of thecommunity. Recall that under the auction system, the government gives the protein itcollects from auctioning the licenses to everyone in the economy as a kind of rebate.Here are three graphs that show the distribution of consumption for an experiment with24 participants. Each graph shows the outcomes of a different rule that limits fishing.6.2.Of the following three rules, which leads to the least amount of inequality,where inequality is measured as the difference between the persons with themost and least consumption?A. Licenses awarded bylottery at the beginning ofthe yearB. Licenses that are sold at auction each month with the revenueshared among all members of the communityC. Licenses awarded by lottery at the beginning of each monthSuppose that a government auctions 40 licenses each month. Last month, in the firstauction, 25 people bid 3.2 pounds of protein, 20 people bid 3.1 pounds, 15 people bid 3.0pounds, 5 people bid 2.9 pounds, and 10 people bid 2.8 pounds.7.1.What was the lowest winning bid in the auction last month?A. 3.1 pounds ofproteinB. 2.9 pounds of proteinC. 2.8 pounds of proteinD. 3.0 pounds of proteinE. 3.2 pounds of proteinSuppose that a government auctions 40 licenses each month. Last month, in the firstauction, 25 people bid 3.2 pounds of protein, 20 people bid 3.1 pounds, 15 people bid 3.0pounds, 5 people bid 2.9 pounds, and 10 people bid 2.8 pounds.7.2. Suppose that in the auction from last month you did not win a license.Remember that if you can fish, you catch 4 pounds of protein this month. If youhunt, you catch 1 pound of protein. Suppose that you think everyone else willbid the same way again this month, and the lowest winning bid will stay thesame. Among these choices, which is your best strategy this month?A. Bid 3.2 pounds ofprotein.B. Bid 3.3 pounds of protein.C. Don’t bother to bid.D. Bid 3.1 pounds of protein and submit your bid very early.Suppose that a government auctions 40 licenses each month. Last month, in the firstauction, 25 people bid 3.2 pounds of protein, 20 people bid 3.1 pounds, 15 people bid 3.0pounds, 5 people bid 2.9 pounds, and 10 people bid 2.8 pounds.7.3. Suppose that students who were initially confused learn how the auction works.Suppose that they are being graded on the basis of how much total protein theyare able to consume. In this case, which of the following is a more likelyoutcome in an auction of the licenses?A. The winning bid is justabove a price of 3 poundsof protein.B. The winning bid is just below a price of 3 pounds of protein.