A Profit-Maximizing Farmer Will Apply Additional Units of Fertilizer Until

question 106

Multiple Choice

A profit-maximizing farmer will apply additional units of fertilizer until the marginal revenue product (MRP) of fertilizer is half the MRP of skilled labor when a unit of fertilizer

• A) costs twice as much as a unit of skilled labor.
• B) costs half as much as a unit of skilled labor.
• C) is half as productive, on average, as a unit of skilled labor.
• D) is twice as productive, on average, as a unit of skilled labor.

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Definitions:

Equilibrium Wage

The wage rate at which the quantity of labor demanded equals the quantity of labor supplied.

Equilibrium Wage

The compensation rate at which labor demand from businesses meets labor supply from employees.

Wage Rate

The amount of money paid to a worker per unit of time, usually expressed per hour or year.

Supply Curve

A graphical representation showing the quantity of goods that producers are willing and able to sell at different prices.