A Soybean Farmer Sells Soybeans in a Perfectly Competitive Market

question 125

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 7 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 less 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:

Mechanisms

Processes or structures within systems that contribute to producing particular outcomes, behaviors, or effects.

Motivating

The process of stimulating interest or enthusiasm in someone to inspire them to take action or engage in a specific behavior.

Workplace

The place or environment where people work, including offices, factories, or any physical or virtual space.

Need

A requirement or necessity for survival and well-being.