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# Production and Cost

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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 70,000 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. 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.
Should the firm continue to operate at a loss?

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#### Solution Preview

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

The firm currently 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. ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer should the firm continue to operate at a loss.

\$2.49