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Al just opened a new bakery outlet in Northwest Phoenix. He owns 4 other shops throughout the Phoenix area. Given his past experience of operating

Al just opened a new bakery outlet in Northwest Phoenix. He owns 4 other shops throughout the Phoenix area. Given his past experience of operating his bakeries, he believes the first employee he hires will generate a marginal product of 50 loaves of bread a day, a second employee would add 40 loaves a day, a third employee would add 30 loaves, a fourth would add 20 loaves, and a fifth employee would add 10 loaves. Al sells each loaf of bread for $5.00. Assuming Al's expectations as to the marginal product is correct, and assuming Al can hire each employee for $100 per day, how many employees should Al hire? Why?

In the above question, list 2 reasons as to why Al would consider hiring more employees in the future.


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