The University of Zambia
Department of Economics
ECN 4135: LABOUR ECONOMICS QUIZ 1 (50 marks)
Date: Friday 30th July, 2021
Time Allowed: 20 minutes
Surname:……………………First name..……………………Comp :…………………….
Each day on a stretch of privately owned coastline (Crab Bay) a type of crab comes ashore with the tide in
search of food. These crabs are much sought after in local restaurants but are not easy to catch. A diving
club approaches the owner of Crab Bay and presents him with data on the average number of crabs the
club could catch daily with different numbers of divers, i.e. average productivity of divers (Hint: show all
necessary computation and be clear in your decision rule)
Number of Average
divers
productivity of
divers
(Number
of
crabs)
1
5
2
6
3
7
4
8
5
7
6
6
7
5
8
4
9
3
10
2
The diving club charges K12 per day per diver and the owner can sell his crabs for K10 each.
Requires:
1) If the owner wishes to maximise profit (Revenue – Divers’ costs), how many divers should he hire
per day?
2) Calculate what will be his daily profit?