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

Multiple Choice

Suppose that in Horsehead, Massachusetts, the cost of operating a lobster boat is $4,000 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(28x - 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 = 24 and X₂ =24.
B) X₁ = 28 and X₂ = 16.
C) X₁ = 24 and X₂ = 12.
D) X₁ = 12 and X₂ = 10.
E) None of the above.