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produce in the short run

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You've been hired by an unprofitable firm to determine whether it should shut down its unprofitable operation.

The firm currently uses 70 workers to produce 300 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 per day. Although you don't know the firm's fixed cost, you know that it is high enough that the firm's total costs exceed its total revenue.

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Solution Summary

Determine what a firm will likely produce in the short run.

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The firm will continue to produce in the short run
Total revenue = (30)(300) = $9,000 Variable ...

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