Is it sensible to continue to operate at a loss

Reference no: EM13241326

Advice for an Unprofitable Firm. You've been hired as an economic consultant by a price-taking firm that produces baseball caps. The firm already has a factory, so it is operating in the short run. The price of caps is $5, the hourly wage is $12, and each cap requires $1 worth of material. The firm has experimented with different workforces and the results are shown in the first two columns of the following table.
a. Fill in the blanks in the table
b. Is it sensible to continue to operate at a loss with 14 workers?

Workers Caps Labor Cost Material Cost Variable Cost Total Revenue Marginal Cost of Caps

14 56
15 60

Reference no: EM13241326

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