Suppose There Are Two Types of Fruit Pickers

question 85

Multiple Choice

Suppose there are two types of fruit pickers. Fast pickers bring in more than 10 units of fruit per day, while the slow pickers bring in fewer than 10 units per day. Johnson Farm pays pickers a flat rate of $50 per day, and Henry Farm pays pickers $5 for every unit picked. The pickers know their productivity level, but the farms don't know a picker's productivity until he or she starts working. Fast pickers will choose to apply at _____.

• A) Johnson Farm
• B) Henry Farm
• C) both farms
• D) neither farm

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Definitions:

Profit-maximizing Level

The point of production at which a firm achieves its highest possible profit, determined by equating marginal cost and marginal revenue.

Perfectly Elastic

Perfectly elastic describes a situation where the quantity demanded or supplied changes infinitely in response to any change in price, represented by a horizontal demand or supply curve.

Industry Supply

The total output of a specific good or service produced by all firms in an industry at various price levels.

Industry Demand

The total demand for all the goods or services produced by a particular market sector.