A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $6 a bushel, the wage rate is $30, the farmer employs eight workers and the marginal product of the eighth worker is 4 bushels. What would you advise this farmer to do?
A. Do nothing because the wage rate and the marginal product of the last worker hired are equal.
B. Increase employment because the wage paid is less than the marginal revenue product.
C. Reduce employment because the wage paid is more than the marginal revenue product.
D. Reduce the product price so that the wage and marginal revenue product will be equal.
Answer: C
You might also like to view...
A barter economy
A) cannot be a market economy. B) is an economy without monetary exchange. C) is an economy with no business firms. D) is not a competitive economy.
If economic profits are zero, then the entrepreneur can go elsewhere and do better
Indicate whether the statement is true or false
Suppose you are choosing between milk and cookies. If the opportunity cost of cookies in terms of milk increases, then the budget curve will
A. shift outward. B. rotate outward. C. rotate inward. D. shift inward.
Exhibit 15-5 International currency markets
Exhibit 15-5 displays the international currency market for yen in terms of dollars and dollars in terms of yen. The supply curve in graph 15-5(A) is determined by:
A. U.S. citizens attempting to purchase Japanese-made goods. B. Japanese attempting to purchase U.S.-made goods. C. U.S. businesses attempting to sell to the Japanese. D. Japanese businesses attempting to sell to the U.S.