With current technology, suppose a firm is producing 400 loaves of banana bread

Question

With current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. If the firm can sell these 400 loaves at $2 per unit, what is its total revenue? Its total cost? Its profit or loss? Will it continue to produce banana bread? If this firm%u2019s situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good?

can you please show the work?

Explanation / Answer

5*40=200 7*60=420 2*60=120 1*20=20 cost = $760 revenue= 400*2=800 profit=rev.-total cost =800-760=40 since they are making a profit they will continue to produce, and other firms will flow resources towards this product to make a share of the profits (until the higher quantity drives the price down to cost

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.