Calculate number of workers to be laid off and divide loss

Reference no: EM13233491

The 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:
Total Variable Cost = (Number of Workers * Worker's Daily Wage) + Other Variable Costs
Average Variable Cost = Total Variable Cost / Units of Output per Day
Average Total Cost = (Total Variable Cost +Total Fixed Cost) / Units of Output per Day
Worker Productivity = Units of Output per Day / Number of Workers
Then, assume that total fixed cost equals $3,000,000, and recalculate the values of the four variables listed above.
For both cases, calculate the firm's profit or loss.

For both sets of calculations, compare the firm's output price and the calculated average variable cost and average total cost. Should the firm shutdown immediately when the total fixed cost equals $1,000,000? Should the firm shut down immediately when the total fixed cost equals $3,000,000?

For one of the cases, if the firm can operate at a loss in the short-run, how many employees need to be laid off in order for the company to break even? To calculate the number of workers to be laid off, divide the loss for the two situations by the daily wage per worker. Given a lower number of employees now working at the company, what is the change in worker productivity? Is the change in worker too large, and the firm should shut down immediately? Or in your opinion, can the workers increase their productivity, assuming that the units of output per day remain fixed at 200,000 units, so that the firm operates at a breakeven state?

Reference no: EM13233491

Questions Cloud

Explain base added to reach the third equivalence point : A 128.2mL sample of 0.15M solution of H3PO4 is titrated with 0.18M NaOH. What volume of base must be added to reach the third equivalence point

How organizational profitability is affected by the scm : reasearch a company that uses supply chain management. look how their organizational profitability is affected by the SCM.

Describe how opec pricing actually evolved : OPEC is the economist's favorite cartel to study, partly because it had such a spectacular short-run success and partly because oligopoly theory could be used to predict how OPEC pricing actually evolved. Research some recent developments in petro..

What is the magnitude of the average acceleration : A 51.0-g Super Ball traveling at 27.0 m/s bounces off a brick wall and rebounds at 21.5 m/s. what is the magnitude of the average acceleration of the ball during this time interval

Calculate number of workers to be laid off and divide loss : The 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.

Write an expression whose value is a reference newly created : A BufferedReader has a constructor that takes a single InputStreamReader parameter. InputStreamReader has a constructor that takes a single InputStream parameter

Relationship between germany and the ussr : How would you describe the relationship between Germany and the USSR leading up to, during and following World War II?

Explain methyl formate and ethyl format : Formic acid, HCHO2, is used to make methyl formate (a fumigant for dried fruit) and ethyl formate (an artificial rum flavor). Ka= 1.7e-4. What is the pH of a 0.39 M solution of formic acid?

Provide a recent negative public relations in sports : cite at least six steps that should be observed in developing an effective public realtions program. Provide a recent negative public relations in sports.

User Account

All Pages