Describe the point at which diminishing returns occurs

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Reference no: EM1365334

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)

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

Reference no: EM1365334

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