Respuesta :
Answer:
A. Total revenue=$800
B. Total cost=$820
C. The economic loss=$20
D. Resources will definitely flow away from the bakery since the business is making a loss, it would be prudent for the resources to be utilized in alternative endeavors that might register profits.
Explanation:
A.
Step 1: Determine firm's total revenue
The total revenue can be defined as the summation of all income that is generated from the sales without accounting for the expenditures. The total revenue can be expressed as shown below;
T=U×N
where;
T=total revenue
U=selling price per unit
N=number of units sold
In our case;
T=unknown, to be determined
U=$1 per unit
N=800 loaves
Replacing;
T=(800×1)=$800
Total revenue=$800
B.
Step 2: Determine the total cost
The total cost is the amount of expenditure that is used in the production of a good or service. The total cost can be expressed as shown below;
C=(Lo×N1)+(La×N2)+(Ca×N3)+(E×N4)
where;
C=total cost
Lo=labor cost per unit
N1=number of units of labor
La=land cost per unit
N2=number of units of land
Ca=capital cost per unit
N3=number of units of capital
E=entrepreneurial cost per unit
N4=number of units of entrepreneurial ability
In our case;
C=unknown, to be determined
Lo=$40
N1=6
La=$60
N2=5
Ca=$60
N3=4
E=$20
N4=2
Substituting;
C=(40×6)+(60×5)+(60×4)+(20×2)=(240+300+240+40)=$820
Total cost=$820
C.
Step 3: Determine the economic profit or loss
The economic profit is a measure of how a company is doing in terms of profits. It usually determines whether the endeavor is financially beneficial or if it causes losses. The economic profit is mostly used to decide whether or not to continue with production. The economic profit or loss can be expressed as shown below;
E=T-C
where;
E=economic profit or loss
T=total revenue
C=total cost
In our case;
E=unknown, to be determined
T=$800
C=$820
Substituting;
E=800-820=-$20
Economic profit/loss=-$20
The economic loss=$20
D.
Resources will definitely flow away from the bakery since the business is making a loss, it would be prudent for the resources to be utilized in alternative endeavors that might register profits.
The firm's total revenue is $800
The firm's total cost is $820
The total economic loss is $-20
The firm would not continue to produce bread because it is earning a loss
Resources would flow away from the bakery good
Total revenue is cost per unit multiplied by total units sold. This is the total income derived from selling bread without accounting for any cost involved in the production of bread.
Total revenue =price x quantity sold
total revenue = 800 x $1 = $800
Total cost is the cost total amount expended in producing a good or a service
Total cost = unit cost x number of units of factor of production
The total cost of producing bread = total cost of labour + total cost of land + total cost of capital + total cost of entrepreneurial ability
Total cost = (6 x $40) + (5 x $60) + (4 x $60) + (2 x $20) = $820
If the firm is making an economic profit or loss can be determined by subtracting the total revenue from he total cost. If total revenue exceeds total cost, the firm is making a profit. If total revenue is less than total cost, the firm is making a loss.
Economic loss = $800 - $820 = $-20
The firm is making an economic loss
The firm is making a loss so it would not continue to produce bread
Resources would flow away from the bakery good because the firms in the industry is earning a loss. So firms would leave the industry
To learn more about economic profit, please check : https://brainly.com/question/15036999?referrer=searchResults
