Happy Cows is a dairy farm that is currently earning $100,000 in economic profit. The managers of Happy Cows are considering adding a second dairy farm, which will generate an additional $40,000 in economic profit. It is economically sound for the managers of Happy Cows to add the second farm if, after accounting for the managerial diseconomies, the first farm's economic profits exceed______ .

Question

Quizplus · Accepted Answer

The second farm adds $40,000 in economic profit. To make it economically sound, the first farm's profit after managerial diseconomies should still exceed $60,000, ensuring total profit remains at least $100,000.

Happy Cows Is a Dairy Farm That Is Currently Earning