Use the following to answer questions:
-(Table: Workers and Corn Output) Look at the table Workers and Corn Output. Laura is a price-taking farmer who produces corn. Assume the wage rate for workers is $125 and the price per bushel of corn is $10. To maximize profits Laura should employ _____ workers.
A) two
B) three
C) four
D) six

Question

Use the following to answer questions: 
-(Table: Workers and Corn Output) Look at the table Workers and Corn Output. Laura is a price-taking farmer who produces corn. Assume the wage rate for workers is $125 and the price per bushel of corn is $10. To maximize profits Laura should employ _____ workers.
A) two 
B) three 
C) four 
D) six

Quizplus · Accepted Answer

Laura should employ four workers to maximize profits. The marginal product of labor is 10 bushels of corn per worker, and the wage rate is $125. So, the marginal cost of labor is $12.50 per bushel of corn. The price of corn is $10 per bushel, so Laura should employ workers until the marginal cost of labor is equal to the price of corn. This occurs when Laura employs four workers.

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