Sarah Owns A Bakery With Four Ovens And A Full-Time Exempt E

Sarah Owns A Bakery That Has Four Ovens One Full Time Exempt Administ

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.

Paper For Above instruction

The concepts of short run and long run are fundamental in understanding production and cost behavior within a business such as Sarah's bakery. The short run is defined as the period during which at least one input remains fixed, meaning it cannot be changed or adjusted. Conversely, the long run is a timeframe during which all inputs can be varied, allowing the business to optimize its production levels based on market demand and other factors.

In the context of Sarah's bakery, the differentiation between the short run and the long run hinges on the flexibility of adjusting various inputs. For example, the number of ovens could be considered a fixed input in the short run because acquiring and installing new ovens would typically require significant capital investment, thus taking time and making it impractical to change quickly. In contrast, in the long run, Sarah could decide to purchase additional ovens to increase capacity or replace existing equipment to improve efficiency.

Similarly, the full-time exempt administrative employee represents a fixed input in the short run since employment levels are often hard to adjust immediately due to contractual or organizational constraints. The part-time hourly bakers exemplify variable inputs, as Sarah can easily adjust their hours or number based on the bakery’s production needs, especially during peak times or seasonal fluctuations.

Understanding why marginal productivity declines after a certain point is crucial in managing production efficiently. This phenomenon, known as diminishing returns, occurs because, with each additional unit of a variable input like labor, the additional output produced eventually decreases. For instance, if Sarah keeps hiring more bakers without increasing ovens or workspace, the bakers might become crowded or less able to work efficiently, leading to lower marginal productivity.

To mitigate or eliminate diminishing returns, Sarah can invest in additional fixed inputs such as more ovens or larger workspace, which would allow more bakers to work simultaneously without overcrowding. Additionally, training employees to improve their productivity or adopting new baking technologies can enhance efficiency. Proper scheduling that optimizes the use of fixed resources ensures that labor is not idle or overburdened, thus maintaining or increasing marginal productivity.

In conclusion, distinguishing between the short run and long run, understanding fixed and variable inputs, and managing diminishing returns are essential for Sarah to optimize her bakery’s production and profitability. Strategic investments and efficient resource allocation can help sustain growth and meet customer demands effectively.

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