Quanttiy of Labor Total Product of Labor
0 0
1 3
2 10
3 16
4 21
5 25
6 28
1. Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each. The table shows the relationship between the number of workers and the number of cakes produced. If Debbie must pay each worker a competitive market wage of $40 per day, how many workers will she hire to maximize profit?

a) three

b) four

c) five

d) six

Question

contestada

Respuesta :

farahahmed13 farahahmed13 · Answer 1 · 2020-01-03T13:45:56+01:00

Answer:

A). 3 Labors will produce 16 cakes which can be sold in $160 giving 25% profit margin which is the maximum profit.

Labors cost cakes Sales Profit %

1 40 3 30 -10 33%

2 80 10 100 20 20%

3 120 16 160 40 25%

4 160 21 210 50 24%

5 200 25 250 50 20%

6 240 28 280 40 14%

Explanation:

Please refer to the attached file for detailed calculation of profit margin.

Profit margin(Gross Profit/Sales) : is the ratio used to calculate to measure maximum profit.

Option A, 3 labors are delivering maximum efficiency in work and producing maximum number of cakes resulting in the highest profit margin.