Assume that marginal revenue equals rising marginal cost at 100 units of output. At this output level, a profit-maximizing firm's total fixed cost is $600 and its total variable cost is $400. If the price of the product is $8 per unit, then the firm should produce less than 100 units of output.

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At 100 units, the firm is producing where marginal revenue equals rising marginal cost, which is the profit-maximizing level of output. At this level, the total cost (fixed + variable) is $1000 ($600 + $400). If the firm sells 100 units at $8 per unit, its revenue would be $800 ($8 x 100). Since revenue is less than total cost, the firm would incur a loss at this level of output. To maximize profits, the firm should produce less than 100 units where marginal revenue is greater than marginal cost.

Assume That Marginal Revenue Equals Rising Marginal Cost at 100