The table below shows production and revenue data for a salmon fisher who sells his catch for $2.50 per kilogram in a perfectly competitive product market, and hires boat hands in a perfectly competitive labour market at an hourly wage of $15.

Marginal revenue product for a salmon fisher

Labours Total prod (kg per hour) Marginal prod (kg per hour) Product price ($ per kg) Total revenue ($ per hour) marginal revenue prod($ hour)

0 0 $ $2.50 $ $

1 20 $2.50

2 36 $2.50

3 48 $2.50

4 56 $2.50

5 60 $2.50

a. Fill in the table.

b. At an hourly wage of $15, how many boat-hands should this fisher employ?

c. Draw a graph showing the marginal revenue product and marginal resource cost curves, and identify the profit-maximizing employment level. Plot only the end-points of the marginal revenue product and marginal resource cost curves, for a total four points. Remember to plot marginal values halfway between the two relevant employment levels on horizontal axis.

d. If the price of salmon falls from $2.50 to $1.50, the values of total revenue and marginal revenue product change at every employment level in the table. What are these new values? At the same hourly wage of $15, how many boat-hands should this fisher now employ?

e. Add the new marginal revenue product curve and profit-maximizing employment level to the graph you drew in part c. Plot only the endpoints of the marginal revenue product curve.