Reference no: EM131157931
Please use the following information and use it to complete a few calculations, and answer questions in your paper. The paper ought to be written as a brief (1-1.5 pages) report that includes your calculations and a short explanation of what the firm should do if it is making a loss.
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.
Be sure to show your work. Include a reference list.
Please submit your assignment
Your assignment will be graded in accordance with the following criteria. Click here to view the grading rubric
This assignment will also be assessed using the Common Assessment criteria provided here.
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