Question

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

Group of answer choices

The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.

The farmer is able to produce 5,400 bushels of wheat when he hires 4 workers.

The farmer is able to produce 5,200 bushels of wheat when he hires 4 workers.

Any of the above could be correct.

The marginal seller is the seller who

Group of answer choices

cannot compete with the other sellers in the market.

would leave the market first if the price were any lower.

can produce at the lowest cost.

has the largest producer surplus.

Answer 1

1. Ans: The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers.

Explanation:

Diminishing marginal production means when more number of workers are employed total production will increase but marhinal product will decrease for subsiquent worker employed.

In the above case, when the farmer hires 3rd worker, the output increases by 1,400(i.e., 4,400-3,000) bushels. According to the law of diminishing marginal productivity, if he hires 4 workers then there will be an increase in the total output but less than the 1,400 bushels. So,if the farmer is able to produce 5,600 bushels of wheat when he hires 4 workers, it means marginal product is 1,200 (i.e., 5,600 - 4,400).

2. Ans: Would leave the market first if the price were any lower.