Use the following to answer question:
-(Table: Total Product of Labor at Debbie's Bakery)Use Table: Total Product of Labor at Debbie's Bakery.Debbie can sell cakes at $10 each.If Debbie must pay each worker $40 per day,how many workers will she hire to maximize profit?
A)3
B)4
C)5

Question

Use the following to answer question: 
-(Table: Total Product of Labor at Debbie's Bakery)Use Table: Total Product of Labor at Debbie's Bakery.Debbie can sell cakes at $10 each.If Debbie must pay each worker $40 per day,how many workers will she hire to maximize profit?
A)3 
B)4 
C)5

Quizplus · Accepted Answer

To maximize profit, Debbie should hire workers until the marginal cost of labor equals the marginal revenue product. If each worker costs $40 and each cake sells for $10, she should hire workers until the additional revenue from the cakes produced by the last worker hired equals $40. This typically occurs at the point where the marginal product of labor starts to decrease, which is often at 5 workers.

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