Five fishermen live in a village and have no other employment or income-earning

Question

Five fishermen live in a village and have no other employment or income-earning possibilities besides fishing. They each own a boat that is suitable for fishing but does not have any resale value. Fish are worth $15 per pound and the marginal cost of operating the boat is $7,500 per month. They all fish a river next to the village. According to the following schedule, they have determined that when more boats are on the river, the total fish caught between all of the boats rises.

Fill in the values for average and marginal return per boat in terms of the dollar value of the fish caught.

Boats Total Fish Caught (lbs) Avg Return per boat Marginal Return per boat

1 900 _____ _____

2 1,620 _____ _____

3 2,160   _____ _____

4 2,520 _____ _____

5 2,700 _____ _____

Explanation / Answer

- Total return = $15*Total fish caught (lbs)

As fish are worth $15 per pound.

- Average return per boat = Total return / no. Of boats

- Marginal return per boat = Total return (n) - Total return (n-1)

Boats Total Fish Caught (lbs) Total Return ($) Average return per boat($) Marginal Return per boat($) 1 900 900*15 = 13500 13500/1 = 13500 ------- 2 1620 1620*15 = 24300 24300/2 = 12150 24300 - 13500 = 10800 3 2160 32400 32400/3 = 10800 32400 - 24300 = 8100 4 2520 37800 37800/4 = 9450 37800 - 32400 = 5400 5 2700 40500 40500/5 = 8100 40500-37800 = 2700

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