Question

The Bountiful Bakery is considering hiring another pastry chef. The bakery knows the average product of its chefs currently is 15 dozen croissants per day. It also believes that the next chef hired will produce an extra 12 dozen croissants per day. A dozen croissants sell for $30. The bakery should hire another worker:

Answer 1

Answer: only if the new chef's daily wage is $360 or less.

Step-by-step explanation:

It should be noted that the decision with regards to hiring a new chef will be made by the company when the marginal value product is more than the marginal cost.

The marginal value product here will be: = (12 × $30) = $360. Therefore, The bakery should hire another worker only if the new chef's daily wage is $360 or less.