A firm is currently producing 100 units of output per day.The manager reports to the owner that producing the 100th unit costs the firm 5 dollars.The firm can sell the 100th unit for 5 dollars.The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses).

Question

Quizplus · Accepted Answer

Producing the 100th unit costs the same as its selling price, so the firm is able to cover the cost of production and break even. Since producing more units would result in additional costs and no increase in revenue, it is best for the firm to continue producing at 100 units to avoid losses.

A Firm Is Currently Producing 100 Units of Output Per