A Soybean Farmer Sells Soybeans in a Perfectly Competitive Market

question 33

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

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

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Definitions:

Disposable Personal Income

Funds available to families for saving or spending after subtracting income taxes.

Retained Earnings

The portion of net income that is kept by a company rather than distributed to its shareholders as dividends, used for investment or paying off debt.

Social Insurance Contributions

Payments made to social security systems by employers, employees, or the self-employed, used to fund public programs such as pensions, unemployment benefits, and health care.

Transfer Payment

Payments made by the government to individuals for which no good or service is provided in return, such as welfare benefits.