When choosing the production level for tomorrow you find that at an output of 100 units, the total variable costs are $20,000 and the average fixed cost is only $50. If the market price is $200, you should:

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At 100 units, the total cost is $25,000 ($20,000 variable + $5,000 fixed), and revenue is $20,000 (100 units * $200). Since revenue covers variable costs, you should continue producing, but since total costs exceed revenue, you should aim to produce where marginal cost equals marginal revenue to maximize profit or minimize loss.

When Choosing the Production Level for Tomorrow You Find That