Scenario 18-1
Gertrude Kelp owns three boats that participate in commercial fishing for fresh Pacific salmon off the coast of Alaska. As part of her business she hires a captain and several crew members for each boat. In the market for fresh Pacific salmon, there are thousands of firms like Gertrude's. While Gertrude usually catches a significant number of fish each year, her contribution to the entire harvest of salmon is negligible relative to the size of the market.
-Refer to Scenario 18-1.If Gertrude is a price taker in the labor market,she decides

Question

Quizplus · Accepted Answer

Since Gertrude is a price taker in the labor market, she has no control over the wages she pays to her crew members. The wage rate in the labor market is determined by the forces of supply and demand. However, she can still decide on how many crew members she will hire depending on the size of her boats and the amount of fish she expects to catch. The price for which she will sell the fish she catches is also determined by the market forces of supply and demand, and Gertrude has no control over it.

Scenario 18-1 Gertrude Kelp Owns Three Boats That Participate in Commercial Fishing