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Consider a firm which employs capital and labor as inputs and sells 5,000 units of output per year at the going market price of $10. As well suppose that total labor costs to the firm are $45,000 annually. Suppose further that the total capital stock of the firm is currently worth $100,000, that the return available to investors with comparable risks is 10 percent annually, and that there is no depreciation. Is this a profitable firm? Explain.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9306965

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