Assignment 4

Topics: Costs, Economics, Economics of production Pages: 3 (517 words) Published: December 14, 2014
December 2, 2014
ECON 101 – Assignment IV
Fall 2014
Please submit until 17:00 on December 11, 2014 to Gizem.

1. The table below shows the following relationship between hours spent fishing and the quantity of fish caught for Juan, a commercial fisherman. Labor
(hours)
1
2
3
4
5
6

Quantity of Fish
(pounds)
10
18
24
28
30
32

Marginal Product
(pounds)

a. Complete the Marginal Product column in the Table.
b. Characterize the production function, i.e. does the production function display increasing marginal returns, diminishing marginal returns, etc. c. Using the data above, graph Juan's marginal product curve. Be sure to label the horizontal and vertical axes. Is your graph consistent with your answer to part (b)? Explain.

d. Juan uses the following inputs for fishing — a small wooden boat (B), a fishing pole (P) and of course, his labor (L). Treating the boat and the fishing pole as fixed inputs and using the data above, graph Juan's Total Product of Labor curve. Be sure to label the horizontal and vertical axes. e. The opportunity cost of Juan's time is $8 per hour. If Juan receives $2 per pound for his fish, what is the optimal number of hours he should spend fishing? Explain how you arrived at your answer. Hint: Recall marginal benefit and marginal cost analysis.

1

2. Suzette's Fancy Packaging subcontracts with Sunshineland Pecans to box dried fruit and nuts for Suzette's mail order business. Suzette rents space for her factory for $400 a week in a nearby strip mall. She can hire temporary workers for $200 a week. The Table below shows her output and cost data. Use the table to answer questions a-e.

# Workers
0
1
2
3
4
5
6

Output
(boxes)
0
220

Marginal
Office
Labor Cost
Product of Rent ($)
($)
Labor
-400
200
250

Total Cost
($)

800

680
160

1,200

940
980

1,000
1,600

a. Complete the table.
b. In the last week of summer Suzette closes her business to go on a family vacation....
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