Textbook Problem

The salmon fishery in Alaska’s Bristol Bay has historically been one of the world’s richest. Over the past few years, poor returns of salmon to the bay and competition from farm-raised salmon have reduced the economic returns to the fishermen. One response to lower revenues has been for fishermen to use family members instead of hiring crew “in order to reduce their costs.” Evaluate this business strategy. Will employing relatives really keep profits from falling? Under what conditions is this a good strategy?