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I’m studying for my class and need an explanation.
A firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage per worker is $80, and the price of the firm’s output is $25. The cost of other variable inputs is $400,000 per day.
Assume that total fixed cost equals $1,000,000. Calculate the values for the following four formulas:
Complete the following:
Provide a report to management of the firm that discusses what should be done.
Be sure to show your work to support the decision you outline in your report.
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