Sophie owns SugarCream bakery that produces 20 pastries in a day. The price of o

Question

Sophie owns SugarCream bakery that produces 20 pastries in a day. The price of one pastry is $12. If she hires another worker, she will be able to produce 24 pastries in a day. Assuming that she operates in a competitive market and aims to maximize her profits, she decides not to hire the additional worker. Which of the following explains why Sophie did not hire the additional worker??

?The opportunity cost of hiring the additional worker was zero.

?The cost of hiring the additional worker was less than the marginal product of the additional worker.

?The cost of hiring the additional worker was less than the average product of the additional worker.

?The cost of hiring the additional worker was greater than the value of producing additional pastries.

Explanation / Answer

Which of the following explains why Sophie did not hire the additional worker

Answer = The cost of hiring the additional worker was greater than the value of producing additional pastries

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