A Wheat Farmer Sells Wheat in a Perfectly Competitive Market

question 173

Multiple Choice

A wheat farmer sells wheat in a perfectly competitive market and hires labor in a perfectly competitive market.The market price of wheat is $2 a bushel,the wage rate is $10,the farmer employs five workers,and the marginal product of the fifth worker is 10.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 less 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:

Neo-Darwinian Decision Rules

Neo-Darwinian decision rules refer to the application of principles from Darwin's theory of evolution, such as natural selection and adaptation, to understand and predict decision-making processes in organisms.

Mundane Situation

Ordinary or everyday scenarios that are typically unremarkable or routine.

Closer Kin

Refers to an individual's family members who are closely related, such as parents, siblings, or children.

Prosocial Behaviour

Actions intended to benefit others, characterized by altruism, cooperation, and other positive social acts.