A Wheat Farmer Sells Wheat in a Perfectly Competitive Market

question 143

Multiple Choice

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, and the farmer employs five workers. If the farmer is maximizing his profits, then the marginal product of the fifth worker is

• A) 0.2 bushels.
• B) 5 bushels.
• C) 20 bushels.
• D) indeterminate from the given information

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Definitions:

Compounded Annually

Refers to the process of calculating interest on both the initial principal and the accumulated interest from previous periods on an annual basis.

Interest

The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.

Withdrawals

Money or resources taken out from a system, economy, or savings for various purposes, reducing the total available amount.

Future Value

The future worth of a current asset on a certain date, calculated by presuming a specific growth rate over a period.