Question: 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 6 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. Assume the firm can sell these 400 loaves at $2 per unit. Enter your answers as whole numbers. If you are entering any negative numbers be sure to include a negative sign in front of those numbers.
What is the firm's total revenue?
What is its total cost?
Calculate the amount of economic profit or loss. $C
Will it continue to produce banana bread?
If this firm's situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good?