View the step-by-step solution to: Diminishing returns. See attached file for full problem

Diminishing returns.
See attached file for full problem description.

Oceanic Pacific decided to conduct a series of experiments to determine
the amount of tuna that could be caught with different crew sizes. The
results of these experiments follow:
Number of Fisherman Daily Tuna Catch (lb)
0
50
110
300
450
590
665
700
725
710
a. determine the point at which diminishing returns occurs.
b. indicate the points that delineate the 3 stages of production.
c. suppose the market price of tuna is $3.50/pound. How many fishermen
should the company use if the daily wage rate is $100?
d. suppose a glut in the market for tuna causes the price to fall to
$2.75/pound. What effect would this have on the number of fishermen
used per boat? Suppose the price rose to $5.00/pound? What effect
would this have on its hiring decision?
e. suppose the firm realizes that to keep up with the demand for tuna
caught by the more humane pole-and-line method of fishing, each of its
boats must catch at least 1,000 pounds of fish per day. Given the
preceding data, what should it consider doing? Explain.

A firm has the following short-run production function:
Q = 50L + 6LІ - 0.5Lі
Where Q = quantity of output per week
L = labor (number of workers)
a. when does the law of diminishing returns take effect?
b. calculate the range of values for labor over which stages I, II, and
III occur.
c. assume each worker is paid $10 per hour and works a 40-hour week.
How many workers should the firm hire if the price of the output is $10?
Suppose the price of the output falls to $7.50. What do you think
would be the short-run impact on the firm’s production? The long-run
impact?
Sign up to view the entire interaction

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors and customizable flashcards—available anywhere, anytime.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access or to earn money with our Marketplace.

    Browse Documents
  • 890,990,898

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
  • 890,990,898

    Flashcards

    Browse existing sets or create your own using our digital flashcard system. A simple yet effective studying tool to help you earn the grade that you want!

    Browse Flashcards