EBK MICROECONOMICS: PRIVATE AND PUBLIC
16th Edition
ISBN: 8220103612142
Author: Gwartney
Publisher: Cengage Learning US
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Question
Chapter ST11, Problem 1CQ
To determine
The role of Individual Transferable Quotas in reducing the risk associated with fishers.
Expert Solution & Answer
Explanation of Solution
Limits on fishing season is used a measure to control overfishing in the oceans, while this type of restrictions induces the fishers to do dangerous race to fish. The individual transferable quota (ITQ) is one of the strategy to solve both of these problems. The ITQs give fishers proprietorship of a portion of the allowable fish catch. Therefore, fishers can catch their own quota without fear of losing their share. This rights-based fishing also reduces the problem of overfishing.
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2.) Using the line drawing
tool,
plot and label the isocost line.
Carefully follow the instructions above, and only draw the required objects.
FILL IN BLANK
d. Now suppose the price of labour rises to $5 per unit, but the firm still wants to produce 500 tires per day. Explain how a cost-minimizing firm adjusts to this change (with no change in technology).
A cost-minimizing firm will be producing on
▼
The samedifferently slopedparallel
isocost line. The firm will use
▼
moresameless
labour and
▼
less
the same amount of
more
capital and produce on
▼
a higher point on the same
a lower point on the same
a lower
a higher
isoquant curve.
QK
Using the graph on the right, determine how the firm
should change the quantity of the production factors in
order to reduce the costs.
The firm that is producing at point A can reduce its costs
for producing 2000 units by employing
A. same capital and more labour.
B. less capital and more labour.
○ C. less capital and the same labour.
D. more capital and more labour.
OE. more capital and less labour.
C
A
B
Q =4000
Q = 2000
C
Isocost line
QL
PL
Suppose the price ratio
is the same along isocost
PK
lines A and B. In the figure at right, the difference between
isocost line A and isocost line B is that
A. the total cost is larger along B.
B. the total cost is larger along A.
OC. labour is relatively more expensive along A.
○ D. the level of output is lower along A.
OE. both capital and labour are relatively cheaper
along A.
Capital
B
Labour
Chapter ST11 Solutions
EBK MICROECONOMICS: PRIVATE AND PUBLIC
Knowledge Booster
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