# of Fisherman Daily Tuna Catch

0 0
1 50 0.02
2 110 0.02
3 300 0.01
4 450 0.01
5 590 0.01
6 665 0.01
7 700 0.01
8 725 0.01
9 710 0.01

Suppose market price of tuna is $3.50/lb. How many fisherman should the company use if the daily rate is $100?

L Q MP AP MRP W

0 0
50 175.00
1 50 50.00 100
60 210.00
2 110 55.00 100
190 665.00
3 300 100.00 100
150 525.00
4 450 112.50 100
140 490.00
5 590 118.00 100
75 262.50
6 665 110.80 100
35 122.50
7 700 100.00 100
25 87.50
8 725 90.63 100
-15 -52.50
9 710 78.80 100

a. Based on the knowledge of the law of diminishing returns in relation to the three stages of production and without knowing the MP for the first three fishermen, we can surmise that the law of diminishing returns occurs with the addition of the fourth fisherman. This is because AP reaches its maximum at 5 fisherman and we know that the law of diminishing returns occurs just before this maximum is reached.

b. Stage I: 1 to 5 units of L
Stage II: 5 to 8 units of L
Stage III: 8 units of L and above

c. 7 L

d. They would have to drop one crew member from the boat and use only 6 fishermen. A decrease in the price of fish to $2.75 per pound cause the company to drop one crew member the boat and use only 6 fisherman. An increase in the market price of fish to $5.00 would make it economically feasible to hire the 8th fisherman.

e. Because the maximum catch in the short run for the boat is 725 pounds, the company would have to consider certain long-run actions. For example: 1) find more skilled fisherman 2) train the current crew to be more productive 3) seek out more abundant fishing areas 4) buy bigger or more modern boats 5) buy modern electronics equipment such as radar to find the fish more rapidly.

To determine how many fishermen the company should use if the daily rate is $100, we need to calculate the profit made by each additional fisherman.

First, let's calculate the revenue generated by each fisherman:
Revenue = Daily Tuna Catch * Price per Pound

Based on the given data, the price per pound of tuna is $3.50. Let's calculate the revenue for each number of fishermen:

For 0 fishermen:
Revenue = 0 * $3.50 = $0

For 1 fishermen:
Revenue = 50 * $3.50 = $175

For 2 fishermen:
Revenue = 110 * $3.50 = $385

For 3 fishermen:
Revenue = 300 * $3.50 = $1050

For 4 fishermen:
Revenue = 450 * $3.50 = $1575

For 5 fishermen:
Revenue = 590 * $3.50 = $2065

For 6 fishermen:
Revenue = 665 * $3.50 = $2327.50

For 7 fishermen:
Revenue = 700 * $3.50 = $2450

For 8 fishermen:
Revenue = 725 * $3.50 = $2537.50

For 9 fishermen:
Revenue = 710 * $3.50 = $2485

Now, let's calculate the profit for each additional fisherman:
Profit = Revenue - Daily Rate

For 1 fishermen:
Profit = $175 - $100 = $75

For 2 fishermen:
Profit = $385 - $100 = $285

For 3 fishermen:
Profit = $1050 - $100 = $950

For 4 fishermen:
Profit = $1575 - $100 = $1475

For 5 fishermen:
Profit = $2065 - $100 = $1965

For 6 fishermen:
Profit = $2327.50 - $100 = $2227.50

For 7 fishermen:
Profit = $2450 - $100 = $2350

For 8 fishermen:
Profit = $2537.50 - $100 = $2437.50

For 9 fishermen:
Profit = $2485 - $100 = $2385

Now, we can see that the profit increases with each additional fisherman. To maximize profit, the company should continue adding fishermen until the profit starts to decrease. In this case, the maximum profit is achieved with 8 fishermen, which results in a profit of $2437.50.

Therefore, the company should use 8 fishermen if the daily rate is $100.