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c.
The table shows the average total cost. Graph omitted. Average total cost is U-shaped.
When quantity is low, average total cost declines as quantity rises; when quantity is high,
average total cost rises as quantity rises.
d.
If we assume your opportunity cost of time is evenly divided within the hour from the
second to the third hour, then the marginal cost of the 20
th
fish is 1 (bait) + 10/6 (since you
catch 6 fish between the 2
nd
and the 3
rd
hour) = 2.67.
Similarly the marginal cost of the 29
th
fish is 1 + 10/2 = 6.
Marginal cost rises with the quantity of output produced, reflecting the
property of diminishing marginal product.
e.
To maximise profit you will catch 28 fish. This will give profits of $57.
See the table.
f.
If you continue to fish then to maximise your profits you would catch 10 fish. You would
make a loss of $14.
g.
You would stop fishing if price is less than average variable cost, which is the case for the
second hour. However, if you caught 10 fish you would get revenue of $21, with variable
cost of $20. The price of $2.10 is greater than the average variable cost of $2 so you would

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