Part 1

Sarah owns a bakery that has four ovens, one full-time exempt administrative employee, and eight part-time hourly bakers.

Based on this information, respond to the following:

• Distinguish between the short run and the long run. What will differentiate the short run and the long run?
• Describe fixed inputs and variable inputs. Which inputs are fixed and which are variable in Sarah’s bakery?
• Why would marginal productivity decline after a certain level of production?
• How can this problem of diminishing returns or marginal productivity be reduced or removed?

Your initial post should be a minimum of 300 words.

part 2

Prior to beginning work on this discussion, read David Trainer’s article, Sysco Feasts on Economies of Scale for Strong Competitive Advantage (Links to an external site.), as well as Chapter 8 in your textbook, and respond to the following:

• How can the long-run average cost (LRAC) curve be derived from the short-run average total cost (SRATC) curve?
• Describe economies of scale and diseconomies of scale.
• What are the determinants of economies of scale and diseconomies of scale, respectively?
• Using a real-world company (other than Sysco), explain the causes of economies of scale for your company.
• How would economies of scale help your company compete in its industry?

Your initial post should be a minimum of 300 words.