The price of wheat is very low this year and the most I can

The price of wheat is very low this year, and the most I can get from the crops is $35,000.
Is the farmers bluffing, or will the farmers lose their jobs if they reject the proposed pay cut.

Solution

The revenue received by the farmer is currently $35000. If he agrees to pay the same amount of $3000, his fixed cost that he has spent few months ago, amounting to $20,000, should not be counted because that has become sunk and cannot be recovered. Now that he should care only about the current costs, by paying $30,000, he can still have $5000 as profit. Therefore it seems that farmer has lack of economic knowledge otherwise he is bluffing.