Answer to Question #136700 in Microeconomics for Abdul

Question

With current technology, suppose a firm is producing 1800 packets of banana bread daily. Assume that the least-cost combination of resources in producing those loaves is 35 units of labour, 20 units of land, 28 units of capital, and 45 unit of entrepreneurial ability, selling at prices of $40, $54, $62, and $40, respectively. Firm sells these 1800 packets at $3 per packet. Based on the given information, answer the questions given below.
Total revenue:
Cost of labour:
Cost of land:
Cost of capital:
Cost of entrepreneurship:
Total cost:
Profit or loss:
Will it continue to produce banana bread? Why?
If this firm’s situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good?

Answer 1

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