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