1. Marcelo farms corn on 500 acres in a competitive industry, receiving $3 per bushel. The relationship between the number of workers Marcelo hires and his production of corn is shown below.

Production Number of Workers (bushels per year)

1 30,000 2 43,000 3 51,000 4 55,000 5 57,000 6 58,000

a. Calculate the marginal product and marginal revenue product of labor for Marcelo’s farm.

b. If the wage for farm workers is $8,000 per year, how many workers will Marcelo hire? Explain.

c. Suppose the yearly wage for farm workers is

$8,000, the fixed rent is $600/acre per year, and there are no other costs. Calculate Marcelo’s profits or losses.

d. Will there be entry into or exit from this industry?