A firm currently uses 40,000 workers to produce 100,000 units of output per day. The daily wage per worker is $80,...

profileshamecicqildeu

A firm currently uses 40,000 workers to produce 100,000 units of output per day.

The daily wage per worker is $80, and the price of the firm's output is $41. The cost of other variable inputs is $400,000 per day. Assume that total fixed cost equals $900,000. (Note: Assume that output is constant at the level of 100,000 units per day.)

 

Calculate the values for the following variables using the formulas that are given:

  • Total Variable Cost = (Number of Workers x Worker’s Daily Wage) + Other Variable Costs 
  • Total Costs = Total Variable Costs + Total Fixed Costs 
  • Total Revenue = Price * Quantity 
  • Average Variable Cost = Total Variable Cost / Units of Output per Day 
  • Average Total Cost = (Total Variable Cost + Total Fixed Cost) / Units of Output per Day
  • Profit/Loss = Total Revenue – Total Costs

Complete the following:

  • Is the firm making a profit or a loss? 
  • Explain the Short Run Shut Down Rule. Should this firm shut down? Please explain
    • 5 years ago
    • 20
    Answer(0)
    Bids(0)