MICROECONOMICS
The salmon fishery in Alaska's Bristol Bay has historically been one of the world's richest. Over the past few years, poor returns of salmon to the Bay and competition from farm-raised salmon have reduced the economic returns to the fishermen. One response to lower revenues has been for fishermen to use family members instead of hiring crew "in order to reduce their costs." Evaluate this business strategy. Will employing relatives really keep profits from falling?Under what conditions is this a good strategy? (Look at it from the viewpoint of Economic vs. Accounting Profits)
Length: 200 words.
Let's say that your firm's total product curve includes the following data: one worker can produce 8 units of output; two workers, 20 units; three workers, 34 units; four workers, 50 units; five workers, 63 units; six workers, 70 units; seven workers, 78 units; eight workers, 80 units; and nine workers, 77 units.
a. What is the marginal product of the seventh worker?
b. When does the law of diminishing marginal product set in?
c. Under these conditions, would you ever choose to employ nine workers? Why?