UNIT VIII HOMEWORK2Unit VIII HomeworkChapter 17: Questions 1-9 on pages 301-3021.(Externalities) Complete each of the following sentences:a.Resources for which periodic use can be continued indefinitely are known asrenewableresources.b.Resources that are available only in a fixed amount areexhaustibleresources.c.The possibility that an open-access resource is used until the net marginal valueof additional use equals zero is known as thecommon-pool problem.2.(Resolving the Common-Pool Problem) Why have authorities found it so difficult toregulate the fishing catch in the open ocean to allow for a sustainable yield?Open-access resources, like fish, are rival in consumption. However, when fish are caught in theocean that are not available for others to catch, the cost of exclusion can be high. As a result, it isimpossible for a firm or an individual to own fish still swimming in open waters and preventothers from catching them, so ocean fish are considered nonexclusive [ CITATION McE19 \l1033 ]. As long as the marginal benefit of catching fish exceeds the marginal cost, individualfishing parties will continue to fish the oceans unchecked. Most individual parties have little orno regard their catches have on stock sustainability, and with no regulations to check individualparties, the oceans will eventually be fished out. While authorities sometimes limit the catch ofthe total industry, they will allow all firms to fish until that limit is reached. However, whenfishing season opens, firms will attempt to catch their quota as quickly as possible, resulting inlarge quantities of fish reaching processing plants at the same time and clogging the supply chain[ CITATION McE19 \l 1033 ]. Open ocean fish will continue to remain a common-pool resourcebecause firms and authorities have not been able to establish and enforce rights and restrictionsto the fishing industry. Since there is no way to control these renewable, open-access resources,regulations have little to no effect [ CITATION McE19 \l 1033 ].
