(Table: Total Product of Labor at Debbie's Bakery) Debbie Owns

question 132

Multiple Choice

(Table: Total Product of Labor at Debbie's Bakery) Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each.The table Total Product of Labor at Debbie's Bakery shows the relation between the number of workers and the number of cakes produced.Debbie must pay each worker a competitive market wage of $30 per day.Now suppose the government imposes a minimum wage law that all bakeries must pay no less than $50 per day.How will this affect her profit-maximizing hiring decision?

• A)She reduces employment from six workers to one worker.
• B)She reduces employment from six workers to five workers.
• C)She reduces employment from six workers to four workers.
• D)She increases employment from one worker to four workers.

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