At a given level of wheat output, one more unit of labor would produce 10 extra bushels, and one more unit of seed would produce 30 extra bushels.A unit of labor costs $6, and a unit of seed costs $12.The farmer should
A)produce less wheat.
B)buy only seed.
C)buy more seed and less labor.
D)buy less seed and more labor.

Question

Quizplus · Accepted Answer

The marginal product of seed (30 extra bushels) is higher than the marginal product of labor (10 extra bushels) so the farmer should allocate more resources towards buying seed. The cost of seed per unit ($12) is also only twice that of labor ($6) so it makes sense to buy more seed and less labor to increase output and minimize costs.

At a Given Level of Wheat Output, One More Unit