A Soybean Farmer Sells Soybeans in a Perfectly Competitive Market

question 195

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 $1 a bushel, the wage rate is $12, the farmer employs six workers and the marginal product of the sixth worker is 10. 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 greater 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:

Operant Conditioning

A training approach in which behavior intensity is changed through rewards or discouragements.

Aversive Conditioning

A method of behavior modification that involves using unpleasant stimuli to discourage undesirable behaviors.

Classical Conditioning

A method of conditioning in which the pairing of two stimuli results in a response initially elicited by the second stimulus being evoked by the first stimulus after repeated associations.

Mary Cover Jones

Mary Cover Jones was a pioneering American psychologist known for her work in behavior therapy and for conducting early studies on the desensitization of phobias.