A small bakery is currently hiring additional staff. They notice that as they employ more bakers, the additional revenue generated from each new baker is increasing due to an uptick in demand for specialty cakes. However, the bakery owner is concerned about rising wages in the area. How should the bakery owner decide how many bakers to hire to maximize profits?

To decide how many bakers to hire for maximizing profits, the bakery owner should compare the additional revenue each new baker brings to the business with the cost of hiring them, which includes wages and other expenses. As more bakers are hired, if the revenue from selling more specialty cakes increases faster than the costs, it makes sense to hire more bakers. However, if wages continue to rise, the owner must ensure that the added revenue still outweighs these increased costs. For example, if hiring a new baker brings in $1,000 in extra sales but costs $800 in wages, it is profitable to hire them. The owner should keep hiring until the extra revenue from one more baker equals the cost of that baker’s wages, ensuring they maximize their profits while keeping an eye on wage trends.