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.

---

Definitions:

Default Risk Premiums

Default risk premiums are additional returns that investors require to compensate for the risk that a borrower might fail to make the required payments on their debt.

Treasury Bond

A long-term, interest-bearing security issued by the U.S. government, with a maturity period typically exceeding 10 years.

Lucent Technologies

A former telecommunications company that was once a part of AT&T before being spun off and eventually merged with Alcatel SA to create Alcatel-Lucent.

Exxon

A multinational oil and gas corporation that is one of the world's largest publicly traded energy providers and chemical manufacturers.