Question

How do I calculate the total cost and revenue for a firm with 70,000 workers, producing 300,000 units of output per day, with a daily wage of $100 per worker and the price of the firm's output at $30?

Answer 1

To calculate the total cost and revenue for the firm, we will break the calculations down into two parts: total costs and total revenue.

### Total Cost Calculation

1. **Daily Wage per Worker**: $100
2. **Number of Workers**: 70,000

To find the total wage cost (which is the main component of the total cost in this example), we multiply the daily wage per worker by the number of workers:

\[
\text{Total Wage Cost} = \text{Daily Wage per Worker} \times \text{Number of Workers}
\]

\[
\text{Total Wage Cost} = 100 \times 70,000 = 7,000,000
\]

Assuming there are no other costs (like materials, rent, etc.), the total cost would be:

\[
\text{Total Cost} = \text{Total Wage Cost} = 7,000,000
\]

### Total Revenue Calculation

1. **Price per Unit of Output**: $30
2. **Units of Output Produced per Day**: 300,000

To find the total revenue, we multiply the price per unit by the total number of units produced:

\[
\text{Total Revenue} = \text{Price per Unit} \times \text{Units of Output}
\]

\[
\text{Total Revenue} = 30 \times 300,000 = 9,000,000
\]

### Summary

- **Total Cost**: $7,000,000
- **Total Revenue**: $9,000,000

These calculations show that the total cost of operating the firm is $7,000,000 per day, while the total revenue from sales is $9,000,000 per day.