is G.N.P an efficient measure of social welfare?

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Fishy business

British cod – the staple of fish and chips – is on the verge of becoming an endangered species, according to the Worldwide Fund for Nature, the conservation group. It stressed that the crisis in the fishing industry was due to poor management and to overfishing. The total weight of cod caught in the North Sea had halved since the 1960s. Similar falls in catches had occurred for other types of fish.
The WWF proposes the establishment of fishing-free zones to protect areas where young fish grow and develop. The WWF said that such a strategy would lead to increased fish stocks and a larger fishing catch for fishermen within five years. However, the problem may become less urgent as consumer demand for this type of fish may decline in the long run. Some observers believe that for many consumers fish and chips may be an inferior good and, in any case, faces a growing number of alternatives.
Use both your knowledge of economic theory and the information above to answer the following.
1. Using a supply and demand diagram, explain:
a. the impact of falling stocks of fish on the prices and sales of fish; (2 marks)
b. the possible long-term economic benefits to producers and consumers of the WWF conservation plan. (2 marks)
2. From the case presented above, outline 3 factors that affect the demand for British Cod and explain the likely market structures that exit in that economy.6marks
3. By giving 2 reasons for your answer, say whether or not fish has elastic demand4 marks
4. Explain the role of price elasticity of demand and supply in determining the extent to which fish prices would rise as the supply of fish fell.(4 marks)
5. In an effort to restrict the supply and sale of fish, the government places a price ceiling on British Cod. Would this have the desired effect? Why or why not? (Use diagram to illustrate your answer to this question (7 marks)

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