Assignment: MANAGERIAL ECONOMICS
Instructions:
Cakes by Monica (a bakery under the umbrella of the Café Brulé restaurant) in Vermillion, SD makes cupcakes for customers to purchase both in the store and in bulk orders for birthday parties and weddings.
Suppose in the short-run, a bakery like Cakes by Monica has a fixed amount of capital but can hire college students from a local college easily to increase production as needed. A production schedule is provided for you where Q is dozens of cupcakes.
a) Using the schedule provided, calculate the marginal product of labor when K = 3.
b) Using your calculations, for which workers are there increasing, decreasing, and negative marginal returns to labor?
c) Suppose this bakery decides to add another unit of capital in the long-run. Find the marginal product of the 4th unit of capital and the marginal product of labor when K = 4.
d) Create a graph of the marginal product of labor for K=3 and K=4.
e) Using your graph and the data, how does the addition of another unit of capital affect the productivity of labor?
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.