With current technology, suppose a firm is producing 800 loaves of banana bread

Question

With current technology, suppose a firm is producing 800 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 6 units of labor, 5 units of land, 4 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 800 units at $1 per unit, will it continue to produce banana bread? What is the firm's total revenue? $ What is the firm's total cost? $ Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Is the firm earning economic profit or incurring economic loss? $

Explanation / Answer

Total revenue of the ffirm: Number of banana Bread $800 (800 breads @ $1) Total cost of the firm: labor (6 units @ 40) 240 Land (5 units @ 60) 300 Capital (4 units @ 60) 240 Enterpreneurial Ability (1 unit @20) 20 Total cost 800 Economic Profit 0 (Total revenue-Total cost)

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