Microeconomics --- Term Project

Microeconomics --- Term Project Objectives: The objectives of this assignment to assess 1. Understanding of the fundamental issues in microeconomics. 2. Ability to comprehend and summarize economic analysis. 3. Ability to develop and analyze microeconomic models. 4. Competence in analyzing the behavior of rational agents and the outcome of interactions among them. 5. Critical reasoning ability to analyze economic policy impacts. Instructions: The answers must be type-written, using 12 points font size and double spacing. The paper should be 6 pages long. (Not including the references page) Question: An Economist article (May 19, 1994) states, “In the past decade, most of the rich world’s fisheries have been exploited to the point of near exhaustion.” The article continues with an analysis of the problem and a discussion of possible private and government solutions. 1. “Do not blame fishermen for overfishing. They are behaving rationally, as they have always done. Develop and analyze an economic model to demonstrate how rational behavior by the fishermen may give rise to overfishing. The model should be a simple linear model. 2. “Until 1976 most world fish stocks were open to all fishermen, making conservation almost impossible. Then an international agreement extended some aspects of national jurisdiction from 12 miles to 200 miles offshore.” Using the concept of property rights, discuss how this agreement reduces the scope of the problem. 3. The article notes that many governments come to the aid of suffering fishermen in ways that encourage increased fishing. Explain how do such policies encourage a vicious cycle of overfishing. 4. “Only when fishermen believe they are assured a long term and exclusive right to a fishery are they likely to manage it in the same way in the same far sighted way as good farmers manage their land.” Comment critically using appropriate economic reasoning. 5. Two decades have passed since 1994. Citing reputable sources, briefly describe the state of fish-stock in recent years. 6. Citing reputable sources summarize the policies that have been adapted to control overfishing since 1994, and the effectiveness of the policy. 7. Consider a policy that was effective in controlling overfishing. Using appropriate economic reasoning, critically analyze why the policy was effective. 8. Consider a policy that was ineffective in controlling overfishing. Using appropriate economic reasoning, critically analyze why the policy was ineffective. 2 Grading Rubric: Goal 1: Understanding of the fundamental issues in Microeconomics. Excellent :In the context of overfishing, identify all the important economic issues involved. Satisfactory: In the context of overfishing, identify few of the important economic issues involved, but leave out at-least one fundamental economic issue. Unsatisfactory: Failure to identify most of the important economic issues involved. Goal 2: Ability to comprehend and summarize economic analysis. Excellent: Focused and brief description of the global fish-stock in recent years. Must cite scholarly articles from reputable sources and empirical evidence. Satisfactory: Short, but unfocused description of the global fish-stock in recent years. Cites scholarly articles from reputable sources and empirical evidence. Unsatisfactory: Unfocused description of the global fish-stock in recent years and fails to cites adequate scholarly articles from reputable sources and empirical evidence. Goal 3: Ability to develop and analyze microeconomic models. Excellent: Accurate development of an economic model to reflect the scenario in question. Correct analysis of the developed economic model. Satisfactory: Acceptable development of an economic model to reflect the scenario in question. Acceptable analysis of the developed economic model. Unsatisfactory: Failure to develop an economic model to reflect the scenario in question or incorrect analysis of the developed economic model. Goal 4: Competence in analyzing the behavior of rational agents and the outcome of interactions among them. Excellent: Precise demonstration of how rational behavior by the fishermen may give rise to overfishing. Satisfactory: Acceptable demonstration of how rational behavior by the fishermen may give rise to overfishing. Unsatisfactory: Failure to demonstrate how rational behavior by the fishermen may give rise to overfishing. Goal 5: Critical reasoning ability to analyze economic policy impacts. Excellent: Rigorous analysis of the effectiveness of a policy by demonstrating how the policy may affect the behavior of rational agents and alter the outcomes of interactions among them. Satisfactory: Acceptable analysis of the effectiveness of a policy by demonstrating how the policy may affect the behavior of rational agents and alter the outcomes of interactions among them. Unsatisfactory: Failure to analyze the effectiveness of a policy by demonstrating how the policy may affect the behavior of rational agents and alter the outcomes of interactions among them.