Table 8-4 -Refer to Table 8-4

question 55

Essay

Table 8-4
$\begin{array}{|c|c|c|}\hline \begin{array}{c}\text { Labor } \\\text { (hours) }\end{array} & \begin{array}{c}\text { Quantity of } \\\text { Fish (pounds) }\end{array} & \begin{array}{c}\text { Marginal Product } \\\text { (pounds) }\end{array} \\\hline 1 & 10 & \\\hline 2 & 18 & \\\hline 3 & 24 & \\\hline 4 & 28 & \\\hline 5 & 30 & \\\hline 6 & 32 & \\\hline\end{array}$
-Refer to Table 8-4.The table above shows the following relationship between hours spent fishing and the quantity of fish caught for Juan,a commercial fisherman.
a.Complete the Marginal Product column in Table 8-4.
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.

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Definitions:

Leisure

Time free from work or duties, which can be used for rest, recreation, or other personal activities.

Parallel Fashion

A manner in which activities or processes occur simultaneously or in a coordinated manner, often leading to increased efficiency or synchronization.

Slutsky Equation

A formula that decomposes the effect of a price change into a substitution effect and an income effect on the consumption of goods.

Extra Income Effect

The change in an individual's consumption choices resulting from a change in real income, due to factors other than a direct income increase.