Question

Pls help!!!
Answer the question based on the following information: Suppose 10 units of product A can be produced by employing just labor and capital in the four ways shown below. Assume the prices of labor and capital are $2 and $3, respectively.

If the price of product A is $1.50, and the firm is producing efficiently the firm will realize


a.Economic profit of $10.
b.Economic profit of $28.
c.Economic profit of $15.
d.Economic loss of $2.
e.Economic profit of $2.

Answer 1

the answer is c! :) hope this helped

Answer 2

As per the information provided, the price of the good being $1.50 and the production being efficient, the firm would discern:

e). Economic profit of $2.

Given that,

Quantity of the product $= 10$ units

Price of the product = $ $1.50$

Cost of labor(w) $=$ $ $2$

Cost of capital(r) $=$ $ $3$

As we know,

Total Revenue = Price × Quantity

= $ $1.50$ × $10$

= $ 15

Total cost = (wL + rK)

= (2 * 4 + 3 * 2)

= (8 + 6)

= $ 14

Profit = Total Revenue - Total cost

= $ 15 - $ 14

= $1

Since r is the constant, the total profit would be of $1 + $1 = $2.

Learn more: Economy

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