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 3 bushels. What would you advise this farmer to do?
Generally the profit maximizing level of activity is where the marginal revenue product of labor is equal to or greater than the wage rate paid. This means that the 5th worker is actually not generating any positive revenue for the farmer as its contribution to revenue is,
True, because you don't everyone good at the same thing. For example, if you want to make a car, you don't want everyone to just know how to build doors.
