A wheat farmer sells wheat in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of wheat is $2 a bushel, the wage rate is $10, the farmer employs five workers and the marginal product of the fifth worker is 3 bushels. What would you advise this farmer to do?
A. Reduce employment because the wage paid is more than the marginal revenue product.
B. Increase employment because the wage paid is less than the marginal revenue product.
C. Do nothing because the wage rate and the marginal product of the last worker hired are equal.
D. Reduce the product price so that the wage and marginal revenue product will be equal.
Answer: A
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When the actual unemployment rate is greater than the NAIRU, the inflation rate
A) remains unchanged. B) tends to increase. C) falls to zero. D) tends to decrease.
List and briefly describe the three types of unemployment
What will be an ideal response?
In a floating exchange rate system, an increase in the value of the exchange rate could be caused by
a. an increase in taxes. b. an decrease in government spending. c. a decrease in the domestic money supply. d. a decrease in exports.
Spending VCU4 on real-world goods and services causes the nation's:
a. Demand for real goods and services to remain the same and monetary base to fall. b. Demand for real goods and services to remain the same and M2 money supply to rise. c. Demand for real goods and services to remain the same and M2 money multiplier to remain the same. d. Demand for real goods and services to rise and monetary base to remain the same.