Sarah owns a bakery that has four ovens, one full-time exempt administrative employee, and eight part-time hourly bakers.
Based on this information, respond to the following:
- Distinguish between the short run and the long run. What will differentiate the short run and the long run?
- Describe fixed inputs and variable inputs. Which inputs are fixed and which are variable in Sarah’s bakery?
- Why would marginal productivity decline after a certain level of production?
- How can this problem of diminishing returns or marginal productivity be reduced or removed?
Your initial post should be a minimum of 300 words.
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