Awheat 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?

Reduce the labor employed.

Explanation:

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,

Total contribution = Marginal product * price = 3 * 2 = $6

Where as wage paid is $10 thus it gives a contribution of 6-10 = -$4.

Thus the farmer is advised to reduce labor employed.

Hope this helps.

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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you can put this in your 11 sentence summary

" most of the money would be invested in innovation, economic convergence."