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With current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume...

With current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 10 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $20, $60, $60, and $20, respectively. Assume the firm can sell these 400 loaves at $2 per unit.

A.What is the firms total revenue?

B. What is the total cost?

C. Calculate the amount of economic profit or loss.

D. Will it continue to produce banana bread? YES or NO

E.If this firm's situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good? AWAY FROM, TOWARD, or NO CHANGE

Help on this question please i need to understand the work behind it. Please and thank you.

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Answer #1

D. yes it will continue to produce as profits are positive for the firm

E. AWAY FROM THE BAKERY , as other firms will try to capture the market with lesser cost

if any doubt let me know

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