Economics Chapter Problems for Chapters Six and Seven.docx

Economics Chapter Problems for Chapters Six and Seven.docx...

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Running Head: CHAPTER PROBLEMS FOR CHAPTERS SIX AND SEVEN 1 Chapter Problems for Chapters Six and Seven Teresa Brookhart National American University
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Running Head: CHAPTER PROBLEMS FOR CHAPTERS SIX AND SEVEN 2 Chapter 6 2. The Oceanic Pacific fleet has just decided to use a pole-and -line method of fishing instead of gill netting to catch tuna. The latter method involves the use of miles of nets strung out across the ocean and therefore entraps other sea creatures besides tuna (e.g., porpoises, sea turtles). Concern for endangered species was one reason for this decision, but perhaps more important was the fact that the major tuna canneries in the United States will no longer accept tuna caught by gill netting. Ocean Pacific decided to conduct a series of experiments to determine the amount of tuna that could be caught with different crew sizes. The result of these experiments follows. Number of fishermen Daily Tuna Catch (Ib.) 1 0 2 50 3 110 4 300 5 450 6 590 7 665 8 700 9 725 10 710 a. Determine the point at which diminishing returns occurs. The law of diminishing returns is a law that states that as more units of variable input are added to a fixed input, at some point the additional outputs (e.g., the marginal product) will begin to diminish. Because at least one input is required to be fixed for this law to affect, this law is considered short-run. This means as the company adds fishermen at some point the marginal product will begin to be less than the marginal product for the last fishermen hired. And the diminishing returns occurs at the 4 th number of Fishermen as the MP is 150, the MP of the third fisherman is 190. Number of fishermen Daily Tuna catch(Ib.) Marginal product (MP) 0 0 0
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Running Head: CHAPTER PROBLEMS FOR CHAPTERS SIX AND SEVEN 3 1 50 50 2 110 60 3 300 190 4 450 150 5 590 140 6 665 75 7 700 35 8 725 25 9 710 -15 b. Indicate the points that delineate the three stages of production.
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