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    Production or Shut down profitability analysis

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    A firm uses 70,000 workers to produce 300,000 units of output per day. The daily wage (per worker) is $100, and the price of the firm's output is $30. The cost of other variable inputs is $500,000 per day. The firm's fixed cost is not known, but it is high enough that the firm's total costs exceed its total revenue.

    Develop a report to management of the firm as to whether or not it should continue to operate at a loss? Be sure to show your work to support the decision you outlined in your report.

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