Suppose you own a small Italian news website. Your team consists of journalists who write news articles
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Question:
Suppose you own a small Italian news website. Your team consists of journalists who write news articles on the website. The wage of each journalist is €3000 per month. Your office building and utilities cost €8000 per month, which you classify as your fixed costs. The business earns ad revenue on each article it produces. From past experience, you know the number of articles you can produce based on the number of journalists you employ.
Question 2A: Assume that the business was operating at the profit-maximizing level of output before Covid-19. Each article brought in ad revenue of €375. How many articles were business producing? What was the total profit? Explain conceptually how you arrived at the profit-maximizing level of output.
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