--%>
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 : Reimbursement Warrant or Revenue

    Reimbursement Warrant (or Revenue Anticipation Warrant): A warrant which has been sold by the State Controller’s Office, as an outcome of a cash shortage in th

    		•
  • Q : Measuring net output GDP in a specific

    Why do national income accountants comprise only final goods in measuring net output GDP in a specific year? Why don't they comprise the value of stocks and bonds bought & sold? Why don't they comprise the value of utilized furniture bought and so

    		•
  • Q : How do mergers influence consumers How

    How do mergers influence consumers?The effects mergers have on consumers differ widely. There may be some inconvenience and anxiety while a customer's bank or branch is obtained. The issuance of new account numbers and new checks is a familiar h

    		•
  • Q : Use of obtainable resources Normal 0

    Normal 0 false false

  • Q : Describe the status of cyclically

    Assume the full-employment, non-inflationary level of real output is GDP3 (not GDP2). If the economy is operating at GDP2 instead of GDP3, describe the status of its cyclically adjusted budget? The status of its present fiscal polic

    		•
  • Q : Define Special Funds Special Funds :

    Special Funds: For legal base budgeting purposes, funds produced by statute, or administratively per Government Code Section 13306, employed to budget and account for taxes, licenses, and fees which are restricted by law for specific activities of the

    		•
  • Q : Explain Generally Accepted Accounting

    Generally Accepted Accounting Principles (GAAP): The accounting rules, principles, conventions, and procedures which are employed for accounting and financial reporting. The GAAP for governments are put by the Governmental Accounting Standards Board (

    		•
  • Q : Effect of change on equilibrium

    Normal 0 false false

  • Q : Explain the investment opportunity

    Explain the investment opportunity schedule (IOS)? How does it help financial managers take business decisions? The investment opportunity schedule illustrates graphically proposed capital budgeting projects depicting the IRR and dollar amount

    		•
  • Q : What is an Initiative Initiative : The

    Initiative: The power of electors to propose statutes or Constitutional amendments and to accept or reject them. An initiative should be limited to a single subject and be filed with the Secretary of State with the suitable number of voter signatures

    		•