Consider a firm that uses capital and labor as inputs and sells 5,000 units of output per year…

Question # 2

Consider a firm that uses capital and labor as inputs and sells 5,000 units of output per year at the going market price of $10.Also assume that total labor costs to the firm are $45,000 annually. Assume further that the total capital stock of the firm is currently worth $100,000,that the return available to investors with comparable risks is 10 percent annually, and that there is no depreciation. Is this a profitable firm? Explain your answer.

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