A Soybean Farmer Sells Soybeans in a Perfectly Competitive Market

question 176

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 $10 a bushel, the wage rate is $15, the farmer employs eleven workers and the marginal product of the eleventh worker is 18. 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:

Organizational Rules

Guidelines established by businesses or institutions to govern the behavior and actions of its members.

Equal Treatment

Equal treatment involves ensuring fairness and impartiality in the way individuals or groups are dealt with, without discrimination.

Self-oriented Role

A personal behavior pattern focused on pursuing one's own interests and needs, often in a work or social context.

Blocking Progress

An action or behavior that impedes the advancement or development of a project, process, or person.