Ebony C. Jefferson
May 31, 2013
Week 4 Assignment

Exercise 9 Page 226

Export trade would increase because the labor unit cost in Germany has declined.

Exercise 10 Page 226:

Exercise 2 Page 260

Variable Input Total Product Average Product Marginal Product
0 0 - -
1 8 8 8
2 28 14 20
3 54 18 26
4 54 13.5 26
5 100 20 46
6 108 18 8
7 98 14 10

Exercise 3 Page 261

Crew Size | Amount of fish caught | Average productivity | Marginal productivity | 2 | 3 | 1.5 | - | 3 | 6 | 2 | 3 | 4 | 11 | 2.75 | 5 | 5 | 19 | 3.8 | 8 | 6 | 24 | 4 | 5 | 7 | 28 | 4 | 4 | 8 | 31 | 3.875 | 3 | 9 | 33 | 3.66 | 2 | 10 | 34 | 3.4 | 1 | 11 | 34 | 3.09 | 0 | 12 | 33 | 2.75 | -1 |

a) Increasing returns will be there, when the total product is increasing at an increasing rate.

b) When MP=0, the TP will be maximum. From the above table, when the crew size is 11, TP is maximum

c) In order to maximize the average amount of fish caught, the crew size should be 7.

Exercise 4 Page 296

| TC | FC | VC | ATC | AFC | AVC | MC | | 0 | 125.00 | 125.00 | 0.00 | - | - | - | - | | 10 | 175.00 | 125.00 | 50.00 | 17.50 | 12.50 | 5.00 | 5.00 | | 20 | 210.00 | 125.00 | 85.00 | 10.50 | 6.25 | 4.25 | 3.50 | | 30 | 235.00 | 125.00 | 110.00 | 7.83 | 4.17 | 3.67 | 2.50 | | 40 | 255.00 | 125.00 | 130.00 | 6.38 | 3.13 | 3.25 | 2.00 | | 50 | 275.00 | 125.00 | 150.00 | 5.50 | 2.50 | 3.00 | 2.00 | | 60 | 455.00 | 125.00 | 330.00 | 7.58 | 2.08 | 5.50 | 3.00 | | 70 | 350.00 | 125.00 | 225.00 | 5.00 | 1.79 | 3.21 | -10.50 | | 80 | 420.00 | 125.00 | 295.00 | 5.25 | 1.56 | 3.69 | 7.00 | |

Exercise 6 Page 297

A. 3 Decentralized facilities B. The Large Facility