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Answer :
Final answer:
To calculate the firm's daily earnings, total revenue from unit sales is subtracted from total costs, which include employee wages and rent. The firm's total revenue is $500, total costs are $330, resulting in a daily profit of $170.
Explanation:
To calculate the firm's daily earnings, we must consider both the revenue from sales and the costs of production, which include employee wages and rent. The total revenue (TR) is calculated by multiplying the number of units produced (100) by the price per unit ($5). Hence, TR = 100 units × $5/unit = $500. The total cost of labor (TCL) is found by multiplying the employee-hours used (13) by the hourly wage rate ($10), which gives us TCL = 13 hours × $10/hour = $130. The office rent is a fixed cost of $200 per day.
The total cost (TC) for a day is the sum of the total cost of labor and the office rent, TC = TCL + Rent = $130 + $200 = $330. Therefore, the firm's profit (or loss) can be calculated by subtracting the total cost from the total revenue, Profit = TR - TC = $500 - $330 = $170. Each day the firm earns a profit of $170.
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Answer:
Profit; $ 170
Step-by-step explanation:
Given,
Number of units produced = 100,
Cost of each unit = $ 5,
So, total revenue = units produced × cost of each unit
= 100 × 5
= $ 500,
Now, the total employee-hours = 13,
Also, the hourly wages = $ 10,
So, the total wages paid = 13 × 10 = $ 130,
Again, rent = $ 200,
Thus, total spending = $ 130 + $ 200 = $ 330
∵ Revenue > Spending
i.e. firm earned profit,
Profit = revenue - spending = $ 500 - $ 330 = $ 170
Hence, each day the firm earns a profit of $ 170.
