janet\'s bakery is a small bakery shop that sells various baked goods. janet own

Question

janet's bakery is a small bakery shop that sells various baked goods. janet owns four mixer's. Her other inputs are refrigarators, ovens, cake boxes, flour, chocolate chips, and workers. janet says if she hires three workers in a shift, they can produce 21 cakes. if she employs four workers in a shift, they can produce 24 cakes.

a) what are the fixed inputs and variable inputs in the production of baked goods? for this bakery?

b) what is the mariginal product of the fourth worker?

c) why does the mariginal product decline as the number of workers increase?

Explanation / Answer

We define ,fixed inputs : The factors of production that cannot be changed & are constraints ,remain fixed or what ever a company produces ,t .as per the question in the bakery shop.The permises of the bakery may be rented on a lease for a period of time we have to pay the rent if we produce more or we dont produce anything. the cost remains the same , the equipments such as mixer ,ovens. feezers, furniture ( working tables) packing materials etc . The raw materials such as flour, sugar, eggs chocolate chips ,esences of different flavor etc . the main factor is the skilled man power.

Variable inputs : the factor of production ,that depends how much is the level of production or the demand of product .in bakery items it totally depends on the orders we receive as these items are perishable also.if demand is going well we can hire workers & if not one has to lay off his workers too.

B) in the bakery she has three workers in ashift to produce 21cakes & if she employs the 4th worker he/she produces 24 cakes.

The marginal product is the change in out put when a company increases its worker from 3 to 4 for its production .To calculate marginal product of labor we divide total change in product by the change in labor. here in bakery 3 more cakes are added by increasing one more labor.

C) Here LAW OF DIMINISHING MARGINAL PRODUCTIVITY apply,s as it states that on increasing one input & keeping the same production level , out put may increase for a short period, but further have a limited effect or negative effect on output, so the profits may not increase, with other factors( such as labor wages, equipments, ) because capacity of the equipments remains the same. though in the bakery 24 cakes may be produced for ashort period.

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