Sarah owns a bakery that has four ovens, one full-time exempt administrative employee, and eight part-time hourly bakers.

Distinguish between the short run and the long run. What will differentiate the short run and the long run?

Describe fixed inputs and variable inputs. Which inputs are fixed and which are variable in Sarah's bakery?

Why would marginal productivity decline after a certain level of production?

How can this problem of diminishing returns or marginal productivity be reduced or removed?