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You have been hired by an unprofitable firm to determine wheter it should shut down its unprofitable operation.The daily wage(per worker)is 100$and the price of the firm's output is 30$.The cost of other variable input is 500$per day.Although you don't know the firm fixed cost, you know that it is high enough that the firm's total cost exceeds its total revenue.

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Total variable cost is assessed.

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Total variable cost = 100 + 500 = 600
Price = 30
Although it seems that the total variable cost is much higher than the price of the output, it doesn't ...

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