Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day.
When the firm uses 9 employee-hours per day, it earns a daily ________ of ________.

Question

Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The accompanying table describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day.   
When the firm uses 9 employee-hours per day, it earns a daily ________ of ________.

Quizplus · Accepted Answer

If the firm uses 9 employee-hours per day, its total cost is $176 (= 9 × $14 + $50), and its total revenue is $240 (= 120 × $2). Thus, its profit is $64 (= $240 − $176).

Suppose a Firm Uses Workers and Office Space to Produce