Question

Assume: all that is produced is sold.

The "In Cod We Trust" fishing company owns 100 identical fishing nets and employs workers who catch fish by throwing the nets from the shore. Because of the times at which the fish are running, only 100 hours of fishing can be done per year per worker. The company owns no other capital goods and uses no other materials. The nets wear out after 100 hours of use, so that the depreciation of the net during one hour of use averages 1/100th of a net. The nets cost $1000 each.

The workers are paid a wage of $10 per hour, and each uses one net. The work is hard and dangerous. The pace of work varies depending on how the workers are feeling that day, and how well their employers keep watch over them (a difficult task because the workers travel to remote points of land often out of the view of the owners). Recently they have been averaging 5 throws of the net per hour. Each time they throw and haul in the net their catch varies, but it is averaging 5 lbs. of fish per throw. The price of fish when it is sold to fish market and grocery stores by the In Cod We Trust company is $1 per lb.

What is the capital stock per worker hour?

What is the capacity utilization ratio? (Full capacity utilization involves using all the nets for 100 hours a year.)

Think of at least 5 changes which would raise the profit rate;

Think of 2 changes which would improve the workers' standard of living;

Which changes will both raise the profit rate and improve the workers' living standards?

Answer 1

A need information about no. Of workers to solve this part(Note we have to mention per worker)

B The changes include raising capital, no. Of workers, using better technology for catching, using better technology for increasing production of fish, reducing depreciation rate through better quality nets

C utilisation of improved technology for catching fish, using new technology for producing more fish, increasing capital stock per worker(not only nets) , increasing capital,

D The above two changes mentioned in part C