Questions: Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative Techniques shown in the table below. Assume further that the firm can hire labor at 3 per unit, land at 3 per unit, capital at 6 per unit, and entrepreneurship at 9 per unit. Production Techniques A B C D --------------- Labor 4 10 6 5 Land 5 3 3 3 Capital 5 2 4 4 Entrepreneurship 1 1 1 1 Refer to the provided table, and suppose that the firm uses production Technique D. If each of the 70 units of Zenia that are produced sells for 1 apiece, then how much will be the total profits of the firm from 70 units of Zenia? Multiple Choice 70 57 13

Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative Techniques shown in the table below. Assume further that the firm can hire labor at 3 per unit, land at 3 per unit, capital at 6 per unit, and entrepreneurship at 9 per unit. Production Techniques A B C D --------------- Labor 4 10 6 5 Land 5 3 3 3 Capital 5 2 4 4 Entrepreneurship 1 1 1 1 Refer to the provided table, and suppose that the firm uses production Technique D. If each of the 70 units of Zenia that are produced sells for 1 apiece, then how much will be the total profits of the firm from 70 units of Zenia? Multiple Choice 70 57 13
Transcript text: Suppose a firm can produce 70 units of a product, Zenia, by combining labor, land, capital, and entrepreneurial ability, as in the four alternative Techniques shown in the table below. Assume further that the firm can hire labor at $\$ 3$ per unit, land at $\$ 3$ per unit, capital at $\$ 6$ per unit, and entrepreneurship at $\$ 9$ per unit. \begin{tabular}{|l|c|c|c|c|} \hline \multirow{2}{*}{} & \multicolumn{4}{|c|}{ Production Techniques } \\ \cline { 2 - 5 } & A & B & C & D \\ \hline Labor & 4 & 10 & 6 & 5 \\ \hline Land & 5 & 3 & 3 & 3 \\ \hline Capital & 5 & 2 & 4 & 4 \\ \hline Entrepreneurship & 1 & 1 & 1 & 1 \\ \hline \end{tabular} Refer to the provided table, and suppose that the firm uses production Technique D. If each of the 70 units of Zenia that are produced sells for $\$ 1$ apiece, then how much will be the total profits of the firm from 70 units of Zenia? Multiple Choice $\$ 70$ $\$ 57$ $\$ 13$
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Solution

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The answer is \$13.

To determine the total profits of the firm from producing 70 units of Zenia using production Technique D, we need to follow these steps:

  1. Calculate the total revenue:

    • Each unit of Zenia sells for \$1.
    • The firm produces 70 units.
    • Total revenue = 70 units * \$1/unit = \$70.

  2. Calculate the total cost:

    • Labor cost: 5 units of labor * \$3/unit = \$15.
    • Land cost: 3 units of land * \$3/unit = \$9.
    • Capital cost: 4 units of capital * \$6/unit = \$24.
    • Entrepreneurship cost: 1 unit of entrepreneurship * \$9/unit = \$9.
    • Total cost = \$15 (labor) + \$9 (land) + \$24 (capital) + \$9 (entrepreneurship) = \$57.

  3. Calculate the total profit:

    • Total profit = Total revenue - Total cost.
    • Total profit = \$70 - \$57 = \$13.

Therefore, the total profits of the firm from producing 70 units of Zenia using production Technique D is \$13.

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