Question

Belen's Bakery sells sourdough bread for $5 a loaf. Belen used 10 ovens to bake and sell 50 loaves last week. This week, she brought in one more oven and sold 56 loaves. What is the marginal revenue product of capital for the 11th oven?

Answer 1

Let the loaves sold be and rolls sold be .

Given:

Cost for 1 loaf of bread = $3

∴ Cost of loaves of bread =

Cost of 1 roll of bread = $1

∴ Cost of rolls =

Total cost of the baked goods = $24

Therefore, as per question,

Now, the graph is shown below.

The vertical axis represent the rolls sold and the horizontal axis represent the loaves sold.

Draw a horizontal line from 12 mark on the vertical axis to the given line to meet at point A. Now, from point A, draw a vertical line to meet the horizontal axis at point B. Point B is the number of loaves sold.

From the graph, loaves sold are 4 when rolls sold are 12.