If a Perfectly Competitive Wheat Farmer Is Maximizing Its Profit

question 138

Multiple Choice

If a perfectly competitive wheat farmer is maximizing its profit and then increases its output,the farmer's

• A) total revenue increases, but total cost rises by more so that the farmer's total profit decreases.
• B) total revenue decreases and total cost increases, both thereby decreasing the farmer's total profit.
• C) total revenue does not change but total cost increases, thereby decreasing the farmer's total profit.
• D) marginal revenue increases, but so does marginal cost, so that the farmer's total profit increases.
• E) total revenue and total cost both rise, but the effect on the farmer's total profit is uncertain.

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Definitions:

Real Wages

Wages adjusted for inflation, representing the actual buying power of compensation for work performed.

Economic Rent

The income earned from the use of resources above what is necessary to keep those resources in their current use.

Real Wages

Salaries recalibrated based on inflation rates to indicate the real value of earnings in terms of buying capacity.

Real Wages

Salaries recalibrated to account for inflation, indicating the actual buying capability of earnings.