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:

Self-Schema

A collection of beliefs and ideas about oneself that guide the processing of self-relevant information.

Self-Esteem

The subjective evaluation of one's own worth as an individual or the feelings a person holds regarding themselves.

Downward Comparison

A self-esteem enhancing strategy involving comparison of oneself with others who are less well off.

Working Self-Concept

The working self-concept is a subset of an individual's self-knowledge that is actively processed and relevant in a given context or situation.