--%>
Assignment Help - homework help

Resources flow

Along with current technology, assume a firm is generating 400 loaves of banana bread daily.  Also, suppose that the least-cost combination of resources in producing those loaves is 5 units of labour, 2 units of capital, 7 units of land, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively.  If the firm can trade these 400 units at $2 per unit, will it continue to make banana bread?  If this firm’s condition is typical for the other makers of banana bread, will resources flow to or away from this bakery good?

E

Expert

Verified

The firm will continue to generates as it is earning economic profits of $40 (Net revenue of $800 minus net cost of $760). If this firm is distinctive, more resources will flow toward banana bread as other potential firms are attracted to the economic profits.

   Related Questions in Finance Basics

  • Q : Mergers encourage the formation of new

    Do mergers encourage the formation of new banks? Yes. The increase in the number of new banks in the second half of the 1990s coincides with a surge in merger activity in the similar period. A study conducted through the Federal Reserve Bank of

    		•
  • Q : Impotence of distinction Normal 0 false

    Normal 0 false false

  • Q : Consolidated balance sheets for the

    In the below table you will determine consolidated balance sheets for the chartered banking system & the Bank of Canada. Employ columns 1 through 3 to show how the balance sheets would read after each of transactions a to c is finished. Analyze

    		•
  • Q : What is the Character of Expenditure

    Character of Expenditure: A classification recognizing the major purpose of expenditure, like State Operations, Local Assistance, Capital Outlay, or Unclassified.

    		•
  • Q : Describe patterns of cash flows for

    Describe two patterns of cash flows for a share of common stock. How does the market find out the value of the most common cash flow pattern for common stock?Cash flows for share of common stock contain dividend payments and the price attained f

    		•
  • Q : Describe value investing Value

    Value investing is an investment strategy which involves buying securities whose shares appear underpriced by some form(s) of fundamental analysis, like stocks with low Price to Earning or Price to Book value. This strategy basically is of buying stoc

    		•
  • Q : Means of weight in the weighted average

    Normal 0 false false

  • Q : Why is replacement value of assets

    Why is the replacement value of assets method not used generally to value complete businesses?The replacement value of assets method is not frequently applied to complete business valuations since it is frequently very hard to locate similar ass

    		•
  • Q : What is Minor Capital Outlay Minor

    Minor Capital Outlay: The construction projects or tools needed to finish a construction project, estimated to cost less than $600,000 bonus any escalation per Public Contract Code 10108.

    		•
  • Q : Companies benefit most from stronger

    What type of U.S. companies would benefit most from a stronger dollar in the foreign exchange market? Describe. U.S. companies which import goods from other countries would benefit from a stronger dollar. More units of foreign currency could b

    		•