Purchase Solution

Analyzing costs and revenues of a loss making firm

Not what you're looking for?

Ask Custom Question

The firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage worker per worker is $80.00, and the price firm is $25.00. The cost of other variables input is $400,000 per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total cost exceeds its total revenue.

Report to mangement as to continue operation or shut down.

Purchase this Solution

Solution Summary

The solution explains the methodology to determine whether a loss making firm should continue its operations or not in the short run.

Solution Preview

Solution:

Number of workers employed =50000
Wage Rate= $80 per worker per day
Daily Labor costs=50000*80=$4,000,000
Other Variable Input costs per day=$400,000
Total Variable Costs per day=Daily Labor Costs+ Other ...

Solution provided by:
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution


Free BrainMass Quizzes
Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.