Question

Gene has a bakery where he produces fresh-baked bread to sell. He employs between one and three workers, depending on demand for his bread. He has two ovens in which he cooks the bread. In his current building, Gene does not have room to add another oven, and his lease on this building runs for 10 more months. Which statement about Gene's bakery is true?a. The workers are a fixed input; the ovens are a variable input.
b. Both the workers and the ovens are fixed inputs.
c. Both the workers and the ovens are variable inputs.
d. The workers are a variable input; the ovens are a fixed input.

Answer 1

Answer:

The answer d. The workers are a variable input; the ovens are a fixed input.

Explanation:

Due to the nature of the lease (i.e. it being 10 months), it is not financially feasible to move to a location containing more ovens at this time. This means that the ovens are not variable. However, the workers are available on demand. Hence, he does not have to call all of them in every day. This means that they are variable, since he can use one to three workers at a time.