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Answer :
Final answer:
The bakery scenario where a second baker produces fewer additional cakes than the first illustrates diminishing returns due to limited kitchen space. Specialization, such as a baker and a chef focusing on different tasks, can increase productivity based on the law of comparative advantage. The difference in productivity, as with different sized ovens, can be an instance of economies of scale.
Explanation:
Concept Illustrated by the Bakery Scenario
The scenario where a bakery hires a second baker, who can only produce an additional nine cakes per day when working at the same time as the first baker, illustrates the concept of diminishing returns. In economics, diminishing returns occur when adding an additional factor of production (such as a second baker) results in a smaller increase in output than previous increases. This typically happens when there is a fixed factor (like kitchen space or oven availability) that limits the total output that can be achieved.
This is further exemplified by considering specialization. If you have a team of two workers, one being a baker and one a chef, the kitchen can produce more meals in a given period if each worker specializes in what they do best. Division of labor allows workers to focus on their specific tasks without the inefficiency of switching roles, leading to increased productivity. The law of comparative advantage also supports this approach, as it suggests that total production is higher when individuals or entities specialize in tasks where they have a lower opportunity cost, even if one party is more efficient at producing all goods.
In the referred case of a bakery manager like Felicia Álvarez and the total product curve, which shows the output level for varying numbers of bakers, a similar concept would apply. Initially, as more bakers are hired, the output increases, but after a certain point, the curve flattens out, showing diminishing returns to scale. The productivity difference noted in the comparison between a Canadian worker and a U.S. worker could be an example of economies of scale, where the Canadian worker, using a larger industrial-size oven, is able to produce more than the U.S. worker with a standard oven.
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