1-Lola is the owner of a bakery that earns 0 (zero) economic profit. Last year, her total revenue was $165,000, her rent was $10,000, her labor costs were $85,000, and her overhead expenses were $11,000.
a. What were Lola’s total explicit costs?
b. What were Lola’s total implicit costs?
c. Currently, Lola has 7 employees; with 7 employees, her bakery can produce 8 wedding cakes per day. If she hired a ninth employee, she’d be able to produce 16 wedding cakes per day
.What is the total change in the marginal product, in terms of wedding cakes?
2-a. What is the change in revenues associated with the output effect for this firm when the price decreases from $50 to $30?
b. What is the change in revenues associated with the price effect for this firm when the price decreases from $50 to $30?
c. What is your recommendation for the firm? Should the firm lower the price, or not? Why?
In your response, be sure to fully define all economics terms used.
Important - Read this before proceeding
These instructions reflect a task our writers previously completed for another student. Should you require assistance with the same assignment, please submit your homework details to our writers’ platform. This will ensure you receive an original paper, you can submit as your own. For further guidance, visit our ‘How It Works’ page.