EC120 (OC) ASSIGN 5(C) - SA SHORT ANSWER 1. The environmental degradation of natural resources is much more prevalent in countries with a long history of communist rule. Using your understanding of common resources explain this phenomenon. (3 marks) Endangered species are a common resource property as it is considered a scarce resource where nobody has an exclusive claim. They are threatened by extinction which is why is it considered scarce. It provides tangible results and we manage it as a community because we co-exist with animals. If our society acts selfish without consideration of these endangered species, it is possible that it can damage the common good for everyone. Countries with a long history of communist rule supports the idea in which a system’s goods are owned in common and are disposed when it is needed. It eliminates private property, which means that these endangered species are a free for all, which does not protect the animals and raises the chances of people killing them recklessly as there are no laws enforced. The communist rule focuses more on equality of humans and their needs as a society rather than thinking about the better good of the environment and long term effects as a whole. Output (Hundreds of documents delivered per month) 0 Fixed Cost Variable Cost Total Cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 1850 0 1850 0 0 0 0 1 1850 400 2250 1850 400 2250 400 2 1850 850 2700 925 425 1350 450 3 1850 1350 617 450 1067 500 4 1850 1900 3200 3750 (rounded (rounded ) ) 463 475 938 (rounded (rounded ) ) 550 5 1850 2500 4350 370 500 870 600 6 1850 3200 5050 308 533 842 700 (rounded (rounded (rounded ) ) ) EC120 (OC) 7 8 ASSIGN 5(C) - SA 1850 1850 4100 5400 5950 7250 264 586 (rounded (rounded ) ) 231 675 850 900 906 1300 (rounded ) 9 10 1850 1850 7300 9800 9150 11650 206 811 1017 (rounded (rounded (rounded ) ) ) 185 980 1165 1900 2500 2. A courier service in Calgary, called Hills and Deliverables, has recently started to deliver mail between downtown office buildings by bicycle. Deliverables is a small company that has several contracts with large oil and gas firms, law firms and brokerage houses. The owner rents a small room in an office building downtown for $1600 a month and leases three bicycles from a local bicycle store for $250 a month (this includes all bicycle maintenance). The cost structure for the firm is reflected in the table above. a) Fill in all the missing blanks in the table. (6 marks) Continued on the next page… b) Assuming that Hills and Deliverables pays all of its workers the same wage, is marginal product of labour decreasing over any range of output? Why or why not? (3 marks) Yes, marginal product of labour decreases as more output is added. According to the table, marginal cost increased, therefore since marginal labour is the mirror of marginal cost, it will decrease. If marginal cost rises, marginal product will fall, and if marginal cost falls, marginal product will rise. Therefore, in this situation, marginal product of labour will decrease as more output is added, because marginal cost increases as more output is added and it is a mirror effect.