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 2 units of entrepreneurial ability, selling at prices of $40, $60, $60, and $20 per unit, respectively.

If the firm can sell these 800 units at $1 per unit, will it continue to produce banana bread?

(Click to select)NoYes

What is the firm's total revenue?

$

What is the firm's total cost?

$

What is the firm's profit or loss?

Instructions: Enter a profit as a positive number and a loss as a negative number; include a negative sign (-) if necessary.

$

Explanation / Answer

Revenue = 800*1 = $800

cost = 40*6+60*5+60*4+20*2=$820

profit or loss = 800-820 = -$20

loss of $20

since they are making a loss they will not continue to produce

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