A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $6 a bushel, the wage rate is $30, the farmer employs eight workers and the marginal product of the eighth worker is 7 bushels. What would you advise this farmer to do?
A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market. The market price of soybeans is $6 a bushel, the wage rate is $30, the farmer employs eight workers and the marginal product of the eighth worker is 7 bushels. What would you advise this farmer to do?
| Do nothing because the wage rate and the marginal product of the last worker hired are equal. |
| Reduce employment because the wage paid is less than the marginal revenue product. |
| Increase employment because the wage paid is less than the marginal revenue product. |
| Reduce the product price so that the wage and marginal revenue product will be equal. |
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