--%>
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 : What is Victim Compensation and

    Victim Compensation and Government Claims Board, California: It is an administrative body in state government exercising quasi-judicial powers (that is, power to make rules and regulations) to set up an orderly procedure by which the Legislature will

    		•
  • Q : What are Federal Funds Federal Funds :

    Federal Funds: For legal basis budgeting purposes, categorization of funds into which the money received in trust from an agency of the federal government will be deposited and finished by a state department in accordance with state and/or federal rul

    		•
  • Q : Influence of mergers and acquisitions

    What influence has mergers and acquisitions had on a customer's access to branches?A branch closing that has resulted from a merger require not necessarily mean a lost relationship. The cause a branch closes is usually the presence of a nearby b

    		•
  • Q : Describe the role of cash and of

    Describe the role of cash and of earnings while a corporation is deciding how much, if any, cash dividends to pay to common stockholders. In the long-run earnings are essential to maintain dividend payments; however at the time an actual dividen

    		•
  • Q : What is Bond Funds Bond Funds : For

    Bond Funds: For legal basis budgeting aims, funds utilized to account for the receipt and disbursement of non-self liquidating common obligation bond proceeds. Such funds do not account for the debt retirement as the liability made by the sale of bond

    		•
  • Q : Why warrants are hardly exercised

    Describe why warrants are hardly ever exercised unless the time to maturity is small? Warrants are hardly ever exercised until the time to expiration is small since the market price of the warrant is higher than the exercise value. The holder o

    		•
  • Q : Marketing of hardware stores Normal 0

    Normal 0 false false

    		•
  • Q : Depict the slope of the line Normal 0

    Normal 0 false false

  • Q : Why do companies extend trade credit

    Accounts receivable are sometimes not gathered. Why do companies extend trade credit while they could insist on cash for all sales? Extending trade credit approximately leads to more sales for all time. If the incremental cash flows, comprisin

    		•
  • Q : Define General Fund General Fund (GF):

    General Fund (GF): For lawful basis accounting and budgeting aims, the predominant fund for the financing state government programs, employed to account for revenues that are not particularly designated to be accounted for by another fund. The main so

    		•