With current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. If the firm can sell these 400 loaves at $2 per unit, what is its total revenue? Its total cost? Its profit or loss? Will it continue to produce banana bread? If this firm
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Answer the following Questions for a Monopoly Firm.
| Price | Quantity | TR | MR | MC | TC | Profit |
| $400 | 0 | $2,000 | ||||
| 390 | 1 | $200 | ||||
| 380 | 2 | 2,360 | ||||
| 370 | 3 | 2,500 | ||||
| 360 | 4 | |||||
| 350 | 5 | 2,720 | ||||
| 340 | 6 | |||||
| 330 | 7 | 3,060 | ||||
| 320 | 8 | $250 | ||||
| 310 | 9 | 3,630 | ||||
| 300 | 10 | $400 | ||||
| 290 | 11 | $500 |
a) Fill in the missing information above for this Monopoly Firm. Note there are no numbers for MC and MR when Q=0.
To complete the table you need to know that the ATC of producing 4 units of output is $650 and that the Total Variable Cost of producing 6 units of output is $870.
b) State the Total Fixed Cost for this firm. Please explain how you got your answer.
c) At which unit of output does Diminishing Marginal Returns start? Please explain your answer.
d) If this firm produces in the Short Run, determine its profit maximizing/loss minimizing output level. Please explain your answer using MC and MR.
e) If this firm produces in the Short Run, determine its profit maximizing/loss minimizing price.
f) If this firm produces in the Short Run, state its profit maximizing/loss minimizing profit amount.
g) If this firm shuts down in the Short Run, determine its profit maximizing/loss minimizing profit amount. Please explain your answer.
h) What should this firm do in the Short Run in order to maximize its profits/minimize its loss (produce or shut down)? Please explain your answer using numbers.
i) Explain what this firm should do in the Long Run.
