Assignment:
1. In order to determine whether time is being spent optimally, a commercial fisherman has recorded the following information over the past year: "hours spent fishing" and "quantity of fish caught." What is the marginal product of fishing for hour spent?
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Hours/day
|
Total Quantityof Fish
(tons)
|
MarginalProduct
|
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0
|
0
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|
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1
|
10
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|
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2
|
18
|
|
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3
|
24
|
|
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4
|
28
|
|
|
5
|
30
|
|
|
6
|
31
|
|
2. The fisherman (see question 1) has a fixed cost of $200 per day and variable costs of $150 per hour (wages and fuel). Fill in the information missing in the following table.
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Hours/
day
|
Total Fixed
Costs
|
Total Variable Costs
|
Total
Costs
|
Marginal
Costs
|
|
0
|
|
|
|
|
|
1
|
|
|
|
|
|
2
|
|
|
|
|
|
3
|
|
|
|
|
|
4
|
|
|
|
|
|
5
|
|
|
|
|
|
6
|
|
|
|
|
b. The fish sell for $100 a ton. How many hours fishing per day should he work in order to earn a maximum profit on his day's activity? And how much is that profit? Please show all your calculations.
3. Explain the statement: "Fixed costs exist only in the short run. In the long run there are no fixed costs." Why might the time frame for the "short run" differ from one industry to the next? Provide examples of two industries with different time frames for the short run. Explain why this is the case.
4. At its current level of production, a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses the marginal revenue curve at an output level of 1000 units. What is the firm's current profit? What is likely to occur in this market and why?