Question

   A commercial fisherman notices the following relationships between hours spent fishing and the quantity of fish caught (see table below).

• 1. What is the marginal product of each hour spent finishing?

  2. Assuming the worth of the fisherman’s time is $10 per hour, compute the marginal cost of catching a fish.

  3. How many hours should the fisherman work if fish can be sold for $3 each?

Hours Fish caught Marginal Product Marginal cost (per one fish)

0 0 not available not available                                     

1 10

2 16

3 22

4 25

5 27

6 28       

Answer 1

Ans: The marginal product of each hour spent finishing is shown in the following table.

Hours	Fish caught ( Quantity)	Marginal Product
0	0	---
1	10	10
2	16	6
3	22	6
4	25	3
5	27	2
6	28	1

Explanation:

Marginal Product = Change in Total product / Change in labor hours

Ans: The marginal cost of catching a fish is shown in the following table.

Hours	Fish caught ( Quantity)	Total Cost	Marginal Cost
0	0	0	---
1	10	10	1
2	16	20	1.67
3	22	30	1.67
4	25	40	3.33
5	27	50	5
6	28	60	10

Explanation:

Total cost = Cost per hour * number of hours

Marginal Cost = Change in Total cost / Change in Quantity

Ans:  The fisherman should work 3 hours ,if fish can be sold for $3 each.

Explanation:

Under perfect competition , the profit maximizing condition is where price equals to marginal cost ( P = MC ) or price is greater than marginal cost ( P > MC)

Hours	Fish caught ( Quantity)	Marginal Product	Total Cost	Marginal Cost	Total Revenue	Profit
0	0	---	0	---	0	0
1	10	10	10	1	30	20
2	16	6	20	1.67	48	28
3	22	6	30	1.67	66	36
4	25	3	40	3.33	75	35
5	27	2	50	5	81	31
6	28	1	60	10	84	24