Question: Taylor makes cake using equipment that she rents for $15 and real carrots and other ingredients that cost $6.22 a slice. She hires workers and finds that they produce cakes according to the following schedule:
Workers are paid $17/hour.
a. Calculate and graph the marginal cost of each slice. Show your calculations! Why does the MC curve have the slope Cup, down, or flat that it does?
b. Calculate and graph the marginal cost of each slice under the following situations (consider each separately). Show your calculations.
i. If workers become more productive so each cake slice can be made with only 70% as much labor
ii. If workers get a raise to $30/hour, with the old productivity.
iii. If there is a great harvest of carrots so the cost of ingredients falls to $2/slice
iv. If the rental price on her oven rises to $30.