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28 November, 18:24

The farmer produces 119 bushels of wheat at a total cost of $3 per bushel. He sells all of the wheat to Firm F for $5 per bushel. Firm F produces 51 pounds of flour from the wheat at a total cost of $6 per pound (including the amount paid to the farmer for the wheat). Firm F sells 45 pounds of flour to consumers for $10 per pound. There are no other firms in this simple economy. In total, how much profit do the farmer and Firm F earn? Enter a whole number with no dollar sign.

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  1. 28 November, 19:57
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    Farmer:

    Total cost of production of farmer = number of bushel * cost of per bushel

    = 119 * $3

    = $357

    Total revenue of farmer = price * quantity sold

    = $5 * 119

    = $595

    Total profit of farmer = Total revenue - Total cost

    = 595 - 357

    = 238

    Firm F:

    Total cost of production of firm F = pounds of flour * cost of per pound

    = 51 * $6

    = 306

    Total revenue of firm F = price * quantity sold

    = $10 * 45

    = 450

    Total profit of Firm F = Total revenue - Total cost

    = 450 - 306

    = 144
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