Suppose you are deciding whether or not to increase production. You are currently making a profit. If you produce one more unit your increase in cost will be $10, your average variable costs will increase to less than that and your average fixed costs will decrease. Finally, your average revenue will increase to $10, but your increase in revenue will be $10. You should

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The increase in cost ($10) equals the increase in revenue ($10), meaning there is no additional profit from producing one more unit. Therefore, production should remain unchanged to maintain current profit levels.

Suppose You Are Deciding Whether or Not to Increase Production