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Answer :
The firm incurs a daily loss of $196 when calculating the difference between the revenue from selling the products and the combined costs of labour and rent.
To calculate the firm's daily earnings, we take the revenue from selling the units and subtract the costs of labour and rent. Each day, the firm sells 100 units of output at a price of $6 per unit, generating $600 in revenue. The cost of labour for the day is calculated by multiplying the 8 employee-hours by the $12 hourly wage rate, which equates to $96. The rent on the office is $700 per day. Therefore, the firm's daily profit can be calculated as follows:
Profit = Total Revenue - (Labour Costs + Rent)
Profit = $600 - ($96 + $700)
Profit = $600 - $796
Profit = -$196
The firm earns a loss of $196 per day under these conditions.
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