A certain competitive firm sells its output for $20 per unit.The 50th unit of output that the firm produces has a marginal cost of $22.Which of following is not necessarily true?

Question

Quizplus · Accepted Answer

The statement "Production of the 50th unit of output increases the firm's average variable cost" is not necessarily true. The average variable cost (AVC) is the total variable cost divided by the quantity of output produced. It may or may not increase with the production of the 50th unit, depending on the amount of variable cost associated with producing that unit. If the variable cost per unit is less than $2, then the AVC would actually decrease with the production of the 50th unit, as the numerator (total variable cost) would increase less than the denominator (quantity produced). Therefore, option D is not necessarily true.

A Certain Competitive Firm Sells Its Output for $20 Per