Asked by Genesis Hernandez on Jun 17, 2024
Verified
Sarah's Pretzel Plant produces pretzels according to the function K is the number of ovens, and L is the number of labor hours Sarah uses to produce her pretzels. At the moment, Sarah uses 9 ovens. Also, she plans to hire 64 labor hours. Sarah can sell each unit of pretzels produced for $3.50. Fill in the table below. If Sarah increased her use of labor hours to 65, would the value of the marginal product of labor exceed the wage rate of $8.50?
Marginal Product
The extra output produced when one more unit of input is added, keeping all other inputs constant.
Labor Hours
The total time spent by employees in productive activities, commonly calculated to assess workforce efficiency.
Ovens
Kitchen appliances used for baking, roasting, or heating food.
- Comprehend the principle of the production function and its significance in identifying the optimal use of labor and capital.
- Analyze the consequences of fluctuations in labor and capital on the marginal product, alongside evaluating the cost-benefit implications of these alterations.
Verified Answer
GJ
Glenmoore JohnsonJun 20, 2024
Final Answer :
If Sarah uses 65 hours of labor, the value of the marginal product of the 65th labor hour exceeds the $8.50 cost of labor. This suggests that if Sarah goes beyond 64 units of labor hours, her profits will be higher.
Learning Objectives
- Comprehend the principle of the production function and its significance in identifying the optimal use of labor and capital.
- Analyze the consequences of fluctuations in labor and capital on the marginal product, alongside evaluating the cost-benefit implications of these alterations.
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