Question

Ashley has a sheep farm with 600 ewes. In 2013, she had 8 ewes in her flock and produced 496 market lambs. That year, a friend told her that she should increase her ram per ewe ratio, so in 2014 she added an extra ram (9 in total), and that year she produced 513 market lambs. In 2015, she decided to add another ram (10 in total), and that year her farm produced 520 lambs.

A. Calculate Ashley’s average product (lambs produced per ram) for 2013, 2014, and 2015.

B. Calculate the marginal product of her 9th and 10th ram.

C. If the revenue per lamb is $50 and the annual cost of a ram is $100, do you think that she should add another ram to her flock?

Answer 1

Year	Number of Ewes(E)	Quantity of market lambs(Q)	Average Product = Q/E	Marginal Product = ∆Q/∆E
2013	8	496	62.00	-
2014	9	513	57.00	17
2015	10	520	52.00	7

A) Ashley’s average product in 2013 = 62 , in 2014 = 57, and in 2015 = 52.

B) The marginal product of her 9th ram is 17 and 10th ram 7 market lambs.

C) If the revenue per lamb is $50 and the annual cost of a ram is $100, she should not add another ram to her flock, because marginal revenue (i.e., $50) is less than marginal cost (i.e., $100).