Question
Cakes by Monica (a bakery under the umbrella of the Caf Brul restaurant) in Vermillion, SD makes cupcakes for customers to purchase both in the
Cakes by Monica (a bakery under the umbrella of the Caf Brul restaurant) in Vermillion, SD makes cupcakes for customers to purchase both in the store and in bulk orders for birthday parties and weddings.
Suppose in the short-run, a bakery like Cakes by Monica has a fixed amount of capital but can hire college students from a local college easily to increase production as needed.A production schedule is provided for you where Q is dozens of cupcakes.
a) Using the schedule provided, calculate the marginal product of labor when K = 3.
b) Using your calculations, for which workers are there increasing, decreasing, and negative marginal returns to labor?
c) Suppose this bakery decides to add another unit of capital in the long-run.Find the marginal product of the 4th unit of capital and the marginal product of labor when K = 4.
d) How do you create a graph of the marginal product of labor for K=3 and K=4.
e) Using your graph and the data, how does the addition of another unit of capital affect the productivity of labor?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started