Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The bakery will increase profit by $50 per day, demonstrating that marginal revenue exceeds marginal cost is key to profit maximization.
B
The bakery will decrease profit by $50 per day, indicating that marginal cost is more important than marginal revenue.
C
The bakery will break even, showing that hiring additional workers does not affect profit.
D
The bakery will increase profit by $50 per day, but this shows that hiring more workers is always beneficial regardless of costs.
Understanding the Answer
Let's break down why this is correct
Answer
If the bakery hires the additional baker, they will earn an extra $300 in revenue each day from that baker. Since the cost to hire this baker is $250 per day, the bakery will make an additional profit of $50 each day by employing them, because $300 (marginal revenue) minus $250 (marginal cost) equals $50. This situation demonstrates the principle of marginal analysis, which helps businesses decide whether to take an action by comparing the extra benefits to the extra costs. In this case, the benefit of hiring the baker outweighs the cost, leading to increased overall profit. Therefore, hiring the additional baker is a good decision for the bakery.
Detailed Explanation
The bakery will make an extra $50 each day. Other options are incorrect because This answer suggests that costs are more important than the money earned; This option implies that hiring more workers doesn't change profit at all.
Key Concepts
Marginal Revenue
Marginal Cost
Profit Maximization
Topic
Marginal Revenue and Profit Calculations
Difficulty
medium level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.