A Soybean Farmer Sells Soybeans in a Perfectly Competitive Market

question 21

Multiple Choice

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) Reduce employment because the wage paid is more than the marginal revenue product.
• C) Increase employment because the wage paid is less than the marginal revenue product.
• D) Reduce the product price so that the wage and marginal revenue product will be equal.

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Definitions:

Specific Aptitude

A talent or skill that is particular to a specific task or area of activity.

Treatment Interactions

The effects that occur when the impact of one treatment varies depending on another variable or treatment.

Standardized Tests

Tests designed to be administered and scored in a consistent, or "standard", manner across different individuals and locations, often used for assessment in education.

Functional Assessment

A process of identifying the causative factors and purpose behind problematic behaviors to develop effective interventions.